WEEKLY MARKET RECAP – JUNE 20, 2025

U.S. stock indexes ended the holiday-shortened week with mixed results, fluctuating amid a series of headlines tied to rising tensions in the Middle East.
Markets found some support on Friday morning after President Donald Trump suggested there was a “substantial chance of negotiations” with Iran soon. Small-cap stocks led the market for the week, followed by the Nasdaq Composite, which recorded modest gains. The Dow was little changed, while the S&P 500 edged slightly lower. Markets were closed on Thursday in observance of Juneteenth.

On Wednesday, the U.S. Federal Reserve concluded its June policy meeting by holding interest rates steady in the 4.25% to 4.5% range, marking the fourth consecutive meeting with no change. As expected, the Fed maintained its cautious approach amid ongoing uncertainty. Fed Chair Jerome Powell stated that “despite elevated uncertainty, the economy is in a solid position,” and emphasized that the central bank remains “well positioned to respond in a timely way to potential economic developments.”

The Fed also released its updated Summary of Economic Projections, which showed no change in the outlook for two rate cuts by year-end. However, policymakers raised their forecasts for inflation and unemployment by the end of 2025 while lowering their projection for GDP growth.
Investor sentiment received an additional boost on Friday after Fed Governor Christopher Waller told CNBC that the Fed could begin cutting rates as early as July.

Economic data released throughout the week was generally weaker than expected. On Tuesday, the Census Bureau reported that retail sales fell for the second month in a row, declining 0.9% in May following April’s 0.1% dip. A sharp drop in auto sales, which spiked in March ahead of a 25% tariff on vehicles, contributed to the decline. However, control group sales—which exclude volatile components like autos and feed directly into GDP—rose 0.4%, driven by gains in categories such as sporting goods and furniture.

In the housing market, the National Association of Home Builders (NAHB) reported that its Housing Market Index dropped two points to 32 in June—the lowest reading since December 2022. Readings below 50 indicate pessimism among homebuilders. NAHB Chairman Buddy Hughes cited high mortgage rates and economic uncertainty as key reasons buyers are pulling back.

Separately, a joint report from the Census Bureau and the Department of Housing and Urban Development showed that housing starts fell 9.8% in May to a seasonally adjusted annual rate of 1.26 million—the lowest level since May 2020.

Amid rising geopolitical tensions and soft economic data, U.S. Treasuries posted gains as yields declined across most maturities. (Bond prices move inversely to yields.) Investment-grade corporate bonds also advanced, with most new issues seeing strong demand.

In contrast, high-yield bond market sentiment was somewhat muted, according to traders at T. Rowe Price. The broader macroeconomic uncertainty and equity market volatility contributed to cautious trading. Still, the high-yield market remained active, with many issuers pushing deals ahead of the Juneteenth holiday.