Stock Market Update Tuesday June 17, 2025

Stock Market Update Tuesday June 17, 2025 Market Equities closed broadly lower today, giving back the bulk of Monday’s gains as crude oil surged, reigniting inflationary concerns.

The S&P 500 fell 0.8%, while the Nasdaq-100 (QQQ) dropped 1.0% and small caps (IWM) declined 1.0%, underperforming once again. Despite the geopolitical overhang, equities have been remarkably resilient, with the S&P 500 still hovering near the 6,000 handle ahead of Friday’s significant options expiry.

Away From Stocks: 2- and 30-year Treasurys ebbed to 3.94% and 4.88%, respectively, from 3.97% and 4.96% Monday. WTI crude rallied to $73.50 per barrel, spot gold finished little changed at $3,384 per ounce, bitcoin sank below $105,000 and the VIX jumped to 21.5, up more than two points on the session.   

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Geopolitical conflicts, while devastating and heavily reported, usually have a temporary impact on stock markets, especially when looking at investments over the medium to long term. Because of this, we anticipate investors will continue to "buy the dip" particularly since both institutional and individual investors have relatively few investments in stocks right now. Recent events suggest the conflict will be brief and contained.

This week has a lot of important economic data coming out, with retail sales numbers due tomorrow and the Federal Open Market Committee (FOMC) rate decision on Wednesday. The Federal Reserve (Fed) is not expected to lower interest rates immediately. Markets are currently predicting the first rate cut in September, with a 66% chance. Interest rate expectations have changed significantly. At the start of the year, markets anticipated two rate cuts (which increased to five after "tariff liberation day"), but those forecasts have now returned to two, matching earlier expectations. While expectations for near-term rate cuts have decreased, the forward curve for 2026 reflects a growing possibility of more aggressive policy easing next year.

Inflation data continues to be lower than expected. The May Consumer Price Index (CPI) showed core inflation rising by only 0.13% month-over-month, a significant slowdown. Notably, core goods prices experienced deflation (falling prices), contradicting predictions that tariffs would cause inflation. In fact, excluding housing and auto insurance, which contributed 0.14%, core CPI was negative, indicating that underlying inflation is clearly decreasing.

Bottom Line:

Our proprietary algorithm has issued weekly buy signals across four of the five major U.S. equity benchmarks—the S&P 500 (SPY), Nasdaq-100 (QQQ), Russell 2000 (IWM), and Dow Jones Industrial Average (DIA). Tuesday, April 29, 2025, we have IWM & RSP ETFs; the two are the most important indexes to give buy signals. Now, we have all five major indexes with buy signals generated from our proprietary algorithm. Monday, April 28, 2025, we had a buy signal generated from our proprietary algorithm for the Dow Jones ETF DIA on the daily chart. The market structure continues to improve, breadth thrusts confirm internal strength, and technical conditions suggest that while short-term upside could be capped, the path of least resistance remains higher. April 25, 2025 Technical Outlook: SPY, QQQ, and DIA have daily buy signals. Sector ETFs (XLK, AIQ, SMH, XLY) have triggered buy signals. April 24, 2025, VIX has a daily sell signal (bullish for equities), as do Bitcoin and Apple. W.D. Gann Cycle Pivot Date: S&P 500 on Saturday, April 5, 2025. Historically, these cycle dates often coincide with significant inflection points in price action. While the market will be closed on Saturday, we will be watching for a potential pivot either into Friday’s close or by Monday’s session. Weekly sell signals persist across all five major indexes.