A Directionless World
June 16, 2025
Financial Markets
Markets were relatively steady through much of the week until geopolitical tensions abruptly escalated. Israel launched a bombing raid on Iranian nuclear facilities, triggering a sharp reaction across global markets. Energy prices surged in response, and equity markets swiftly reversed course, posting widespread losses by week’s end.
| Index | Prior Week | Year-to-Date | 1-Year |
|---|---|---|---|
| S&P 500 | -0.36% | 2.25% | 11.50% |
| S&P 500 Equal Weighted | -0.76% | 1.82% | 9.61% |
| Dow Jones Industrial Avg. | -1.30% | -0.01% | 11.13% |
| NASDAQ Composite | -0.61% | 0.82% | 10.62% |
Volatility continues to be fueled by inconsistent policy signals from the administration. On-again, off-again tariff proposals, the ongoing Ukraine and Middle East conflicts, and an uncertain economic environment have kept investors on edge. Markets thrive on stability which is in short supply at present. In the absence of clear direction, many investors are opting to remain on the sidelines until there is greater clarity or at least a discernible path forward.
Economics
Investors may get a clearer read on global leadership at the upcoming G7 summit in Calgary. While economic coordination will be on the agenda, much attention will inevitably focus on the deteriorating Israel-Iran situation and its broader implications for global stability. Historically, the United States has served as a moderating force in such situations. We will see if President Trump takes on that role as the meeting kicks off this week.
Despite heightened geopolitical and economic uncertainty, both the U.S. and global economies have demonstrated surprising resilience. Much of the credit belongs to the Federal Reserve, which has resisted political pressure to ease monetary policy prematurely. If energy prices remain elevated, the Fed will face renewed calls to hike interest rates—but it is unlikely to act. Energy-driven inflation, after all, is not something that can be addressed through interest rate adjustments.
Conclusion
Confusion remains the greatest adversary of investors. With persistent uncertainty on both political and economic fronts, markets may continue to struggle for direction in the near term. Investors should remain cautious and focused on fundamentals.
In addition to monitoring geopolitical developments, investors would be wise to keep an eye on the upcoming U.S. midterm elections, which could have meaningful implications for economic policy, market regulation, and global engagement.
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II. Investment Analysis
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