Here are the 5 things we’re watching in the stock market in the week ahead
After a muted few days for the market, investors in the week ahead will grapple with the fallout of the United States’ decision to enter Israel’s war with Iran. Here’s a closer look at the five big things we’re watching in the market in the week ahead. 1. Geopolitics: President Donald Trump said Saturday night that the U.S. attacked Iranian nuclear sites , including the Fordo facility built into the side of a mountain. Iran’s foreign minister called America’s strikes “outrageous,” and said the country reserves all options to defend itself. Investors had spent much of last week trying to gauge whether Trump would bring the U.S. military directly involved in the Israel-Iran conflict. Through Friday’s market close, the impact on stocks had been largely muted, as investors bet the back-and-forth strikes between the longtime regional foes would not spillover into a broader conflagration that meaningfully dents economic growth — as analysts at Deutsche Bank pointed out , that has historically been what it takes for geopolitics to really matter to the market long-term. In the wake of direct U.S. military involvement, one of the big questions for investors is what happens to the price of oil. Iran’s response to the American bombings could influence that. Any developments that meaningfully disrupt oil supply, including the vital Strait of Hormuz shipping route, could lead to further price spikes. In any case, the commodity figures to remain a crucial barometer for how traders are evaluating the Middle East situation, and even absent supply disruptions, the market could price in a higher “risk premium,” putting upward pressure on prices. 2. Inflation data: The Fed’s preferred inflation gauge — the personal consumption expenditures price (PCE) index — is set to be released Friday morning, offering the latest look at how Trump’s tariffs are rippling through the U.S. economy. A different measure of inflation, the consumer price index (CPI), rose a less-than-expected 0.1% month over month in May, the Bureau of Labor Statistics reported June 11 . That put the annual inflation rate, as measured by the CPI, at 2.4%. The Fed puts greater focus on the PCE index because it believes the metric does a better job of capturing actual consumer spending patterns, particularly in response to price changes. The Fed has a dual mandate of maintaining price stability and maximum employment. While Trump’s tariffs have yet to show a major impact on official inflation statistics, the Fed has adopted a patient stance and kept interest rates steady at its policy meeting last week , just as it did in early May . The central bank argues the full effect of tariffs hasn’t yet been felt and the labor market has remained resilient enough to wait for more data. “It takes some time for tariffs to work their way through the chain of distribution to the end consumer. A good example of that would be goods being sold at retailers today may have been imported several months ago…
Read More: Here are the 5 things we’re watching in the stock market in the week ahead