Weekly Market Insights | Conflict Fears Rattle Markets; Fed Holds Steady

Stocks were mixed during the holiday-shortened trading week as uncertainty over conflict in the Middle East weighed on investors.

The Standard & Poor’s 500 Index slipped by 0.15 percent, while the Nasdaq Composite Index rose by 0.21 percent. The Dow Jones Industrial Average was flat (+0.02 percent). The MSCI EAFE Index, which tracks developed overseas stock markets, declined 1.54 percent.^1,2

Stocks Rise, Then Slump

Stocks opened higher, and oil prices fell at the start of the week as investors hoped Middle Eastern tensions would ease.³

However, as investors parsed through updates on the conflict, stocks fell over ongoing uncertainty. Conflicting statements from those involved, as well as from world leaders, contributed to the uncertainty.⁴

Midweek, stocks rallied ahead of the Fed’s interest rate decision. Markets seemed to dismiss news that housing starts dropped unexpectedly to their lowest level in five years.

The Fed held short-term rates steady. Stocks moved up and down during the Fed Chair’s press conference before ending the trading session slightly down ahead of Thursday’s stock market holiday.⁵

Following the holiday, anxious investors refocused on geopolitical tensions and developments. As the week closed out, investors appeared to take a risk-off approach heading into the weekend.⁶

The Fed Holds Rates Steady

As expected, the Federal Reserve kept the Fed funds rate at its target range of 4.25 percent and 4.5 percent. However, the central bank did suggest it may adjust rates later this year, and policymakers expressed concerns about inflation and the outlook for gross domestic product.

Following the decision, Fed Chair Powell said policymakers are “well positioned to wait” before moving on short-term rates. Powell indicated that trade policy has clouded the inflation outlook, making policymakers concerned about consumer prices.^7,8

Footnotes and Sources

1. ^{WSJ.com, June 20, 2025}
2. ^{Investing.com, June 20, 2025}
3. ^{MarketWatch.com, June 16, 2025}
4. ^{CNBC.com, June 17, 2025}
5. ^{WSJ.com, June 18, 2025}
6. ^{CNBC.com, June 20, 2025}
7. ^{MarketWatch.com, June 16, 2025}
8. ^{WSJ.com, June 18, 2025}