June 13th, 2025
Market Performance:
Stocks retreated this morning as Trump tells Iran to ‘make a deal’ following Israeli strike. Rising tensions in the Middle East have rattled markets, driving investors toward safe-haven assets and pushing oil prices sharply higher. Israel signaled that its operations aren’t over, potentially sustaining pressure on global markets amid fears of a broader conflict — though the U.S. remains uninvolved for now. European and Asian markets are broadly in the red, though the losses remain limited, with major indexes still posting strong year-to-date gains.
Economic Takeaways:
- Investors ran to safe havens like the U.S. dollar and gold, with the latter up 1%.
- U.S. Treasuries are little changed, but the 10-year yield has dropped to 4.37% over the past five days from 4.5%.
- Oil spiked at $74 but is still 5% below last year’s level and in the middle of its three-year range.
- Rate cut odds remain below 4% early Friday, according to the CME FedWatch Tool.
- This week’s tame Consumer Price Index (CPI) and Producer Price Index (PPI) readings are likely to be key discussion points at next week’s Federal Open Market Committee (FOMC) meeting.
- The Organization for Economic Cooperation and Development (OECD) sees U.S. gross domestic product (GDP) slowing from 2.8% in 2024 to 1.6% in 2025.
- The Institute for Supply Management (ISM) Services PMI® unexpectedly fell into contraction territory for the first time in nearly a year.
- Bitcoin (/BTC) slipped 1.8% in the early morning.
Gold (/GC) rose 1%. - The U.S. dollar ($DXY) rose 0.5% following Israel’s attack on Iran.
- The Cboe Volatility Index (VIX) spiked over 10% following the attack on Iran, after falling about 60% over the past two months. Futures suggest the VIX could stay above its historical average of 20 through year-end, hinting at more turbulence ahead.
Middle East Tension
Defense stocks rose early Friday following a wave of Israeli airstrikes on Iran, escalating tensions in the Middle East and fueling concerns over a wider regional conflict. Lockheed Martin (LMT) climbed 3%, while Northrop Grumman (NOC) and RTX (RTX) each advanced nearly 2%. All three defense contractors supply arms to Israel via U.S. government contracts.
Thursday night’s Israeli airstrikes across Iran sent shockwaves through oil markets, stoking fears that an extended conflict could drive up oil prices and fuel inflation heading into summer. Crude futures initially surged as much as 13% before easing somewhat by Friday morning.
New research from JPMorgan Chase (JPM) highlighted the growing risks. A Friday morning note indicated that while Trump is likely to stay focused on his “primary objective of maintaining low energy prices,” the likelihood of a “worst-case scenario” in the region has now risen to 17%.
That follows a separate JPMorgan analysis from Thursday, which had estimated just a 7% chance of such an outcome—one that could send oil prices soaring to $120 a barrel and push U.S. CPI to 5%.
Here’s how market watchers from Sydney to Paris are reacting to the latest developments:
Nicolas Forest, chief investment officer at Candriam in Brussels
“The attack on Iran is a classic risk-off factor that leads to a decline in stocks and a flight to quality. The sharp rise in oil prices, if it continues, could negatively impact growth and inflation, reinforcing the potential risk of stagflation already present with the tariff war. The oil price rally is clearly not in the interest of the Trump administration”
Kim Forrest, chief investment officer at Bokeh Capital Partners (U.S.)
“It seems like Israel has taken it upon itself to destroy the nuclear bomb building capabilities of Iran and that’s not what we’ve seen in the past. It’s unclear what will happen throughout the night… We’ll see if cooler heads can prevail”
“This is very serious. It’s surprising the market isn’t down more. Do I expect things to get lower in the coming hours? Heck yeah, I expect it to be lower by the time I wake up but it’ll also depend on who’s talking and what’s happening”
Alexandre Baradez, chief market analyst at IG in Paris
“This is likely to put the current rally on European and US indexes on hold. The stock market was getting expensive so this will encourage investors, particularly retail, to take some profits now”
Alexandre Hezez, chief investment officer at Group Richelieu in Paris
“This goes against what central banks were expecting for oil prices and could potentially change their scenario by heating up inflation and slowing growth”
Matt Maley, chief market strategist at Miller Tabak + Co. (U.S.)
“The comments about doing whatever it takes, Netanyahu saying this is just the beginning and the references to self defense — they are preparing for a serious retaliation. The last time Iran retaliated nothing got through but nobody knows what will happen next”
Notables
- Shares of crypto-related names like Coinbase Global (COIN) and Strategy (MSTR) each fell more than 1%.
- Boeing (BA) slipped nearly 1% Friday, adding to Thursday’s 5% drop following the Air India crash involving a Boeing 787. GE Aerospace (GE), whose engines powered the jet, extended losses with a 1.7% decline after falling 2.6% the previous session. Spirit AeroSystems (SPR), which manufactures fuselages for Boeing, also fell Thursday.
- Cardinal Health (CAH) was flat after a 4.5% jump Thursday, driven by an earnings forecast raise for the current fiscal year. In an investor day presentation, the company highlighted “significant progress in mitigating tariff exposure.”
- Oracle (ORCL) edged lower following Thursday’s 13% surge, which came after upbeat earnings and guidance that impressed investors.
- Chewy (CHWY) dipped 0.5% Friday after gaining 1.5% Thursday on better-than-expected earnings and revenue.
- Chime Financial (CHYM) added another 0.6% early Friday, extending its rally after a strong IPO debut Thursday. Shares opened at $43—roughly 60% above the $27 offering price—continuing a recent streak of robust public market entries.
- Tesla (TSLA) declined nearly 1%, while other big tech and AI names—Nvidia (NVDA), Amazon (AMZN), Advanced Micro Devices (AMD), and Palantir (PLTR)—fell 1% to 2% in pre-market trading, as investors rotated away from growth stocks amid geopolitical uncertainty. Tesla also came under pressure after former President Trump signed a joint congressional resolution to block California’s ability to set its own vehicle emissions rules, according to Barron’s.
- Risk-off sentiment weighed on other popular names as well, including AppLovin (APP), Super Micro Computer (SMCI), and Meta Platforms (META).
- In contrast, defense stocks surged. Lockheed Martin (LMT) gained 3.3% and Northrop Grumman (NOC) rallied 4.8% as hostilities escalated between Israel and Iran, boosting demand for defense-sector plays.
- Energy stocks followed oil prices higher, with Exxon Mobil (XOM) rising 2.7% and Chevron (CVX) up 2.3% early Friday. Crude jumped to $73 per barrel, up from recent lows in the $60s, amid concerns Iran could disrupt global oil exports. Still, ample supply may help contain further price spikes.
- Airline stocks were hit hard by rising geopolitical risks, with United Airlines (UAL) and Delta Air Lines (DAL) both sinking more than 5% on fears of declining travel demand.
- Adobe (ADBE) dropped 3.3% in pre-market trade, despite topping earnings and revenue estimates and raising full-year guidance—suggesting the bar was set even higher by investors.
- Arista Networks (ANET) slid 2.4% early Friday amid the broader market pullback, after gaining 1.4% Thursday with no significant news. Shares remain below their early-2025 highs.
·What’s Ahead
- Key central bank meetings loom next week.
- The Fed is also expected to hold rates steady next week, maintaining a wait-and-see approach amid ongoing economic strength and trade uncertainty.
- The Bank of Japan (BOJ) decides on rates late Monday U.S. time, but isn’t expected to make a change, according to a Reuters survey of analysts.
- Market is closed on Thursday in honor of Juneteenth.
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