Weekly Trader's Outlook

If you read last week's blog you might recall that I declined to provide a forecast for this week given last Friday's news of a "pre-emptive" strike on Iran by Israel and the elevated geopolitical uncertainty. While heightened uncertainty still surrounds the Israel/Iran war, U.S. President Donald Trump said he will decide whether the U.S. will get involved in the conflict within the next two weeks which at least provides a window for potential negotiations with Iran. European officials are currently holding talks with Iranian officials in Geneva in hopes of achieving a diplomatic solution. Oil prices are higher on the week due to potential supply disruptions, but the Straight of Hormuz remains open, which is crucial for the global oil supply.

There wasn't a lot of news this week on the trade front as negotiations between the U.S. and the E.U., Japan and other global players are ongoing. July 9th marks the end of the 90-day tariff pause window, but U.S. Treasury Secretary Scott Bessent has stated that the July 9th deadline may be extended for 18 trading partners involved in good-faith negotiations.

On the economic front, the Federal Reserve held one of its 2-day Federal Open Market Committee (FOMC) meetings this week and the committee continued to convey a patient stance regarding any potential rate cuts. The Fed's updated "dot plots" had a stagflationary tone as inflation expectations were increased while growth forecasts were decreased for 2025 (more on this in the "Economic Data, Rates & the Fed" section below).

At the time of this writing (2:40 PM ET), stocks are trading mostly lower on low volume on this triple witching expiration day (DJI + 22, SPX -8, COMPX -72) as investors appear reluctant to take a firm commitment ahead of the weekend. The recent price action suggests markets are in a "wait and see" mode regarding trade or any developments out of the Middle East. The near-term technicals are conveying this as well as recent bullish momentum has transitioned into sideways consolidation (more on this in the "Technical Take" section below). This has largely been a Teflon stock market off the April lows, which is classic "climb the wall of worry" bull market behavior, but perhaps the waning momentum is conveying some rest is needed for the bulls. Therefore, my forecast for next week is "Slightly Bearish". I'm not expecting a significant pullback in stocks in the coming weeks unless there is either an escalation in the Israel/Iran war or a significant breakdown in trade talks and subsequent hike in tariff rates. What could challenge next week's outlook? While expectations are low that Iran will unconditionally surrender, any constructive progress with Iran negotiations could provide a bit of a relief rally for stocks.

Other Potential Market-Moving Catalysts:

Economic:.

• Monday (6/23): Existing Home Sales
• Tuesday (6/24): Consumer Confidence, Current Account Balance, FHFA Housing Price Index, S&P Case-Shiller Home Price Index
• Wednesday (6/25): EIA Crude Oil Inventories, MBA Mortgage Applications Index, New Home Sales
• Thursday (6/26): Advanced International Trade in Goods, Advanced Retail Inventories, Advanced Wholesale Inventories, Continuing Claims, Durable Goods, EIA Natural Gas Inventories, GDP – 3rd Estimate, Initial Claims, Pending Home Sales
• Friday (6/27): PCE Prices, Personal Income, Personal Spending, University of Michigan Consumer Sentiment - Final

Earnings:

• Monday (6/23): FactSet Research Systems Inc. (FDS), Commercial Metals Co. (CMC), KB Home (KBH)
• Tuesday (6/24): Carnival Corp. (CCL), TD Synnex Corp. (SNX), FedEx Corp. (FDX), AeroVironment Inc. (AVAV), Worthington Enterprises Inc. (WOR), BlackBerry Ltd. (BB)
• Wednesday (6/25): Paychex Inc. (APYX), General Mills Inc. (GIS), NovaGold Resources Inc. (NG), Winnebago Industries Inc. (WGO), Micron Technology Inc. (MU), Jefferies Financial Group Inc. (JEF), Levi Strauss & Co. (LEVI), H.B> Fuller Company (FUL)
• Thursday (6/26): McCormick & Company Inc. (MKC), Walgreens Boots Alliance Inc. (WBA), Acuity Inc. (AYI), Lindsay Corp. (LNN), Nike Inc. (NKE), National Beverage Corp. (FIZZ), Concentrix Corp. (CNXC)
• Friday (6/27): Apogee Enterprises Inc. (APOG), GreenPower Motor Company Inc. (GP)

There was a moderate dose of economic data this week which was highlighted by Wednesday's FOMC meeting and a mixed retail sales report. While headline Retail Sales in May came in below estimates, the Control Group exceeded estimates. Additionally, the decline in May retail sales perhaps isn't a surprise given the strong readings in the prior two months, potentially due to "pull forward" demand because of anticipated tariffs. Lastly, this week's housing data was soft across the board. Here's the breakdown from this week's reports:

• FOMC Meeting: As expected the Federal Reserve kept the Fed Funds rate at 4.25-4.50% and Chairman Powell continued to convey a patient stance regarding potential future rate cuts. The Fed's dot plots showed upward revisions to inflation expectations (Headline PCE was revised up to 3.0% from 2.7%, citing trade uncertainty), the unemployment rate (to 4.5% from 4.4% in 2025) and downward revisions to economic growth (2025 GDP lowered to 1.4% from 1.7% in March).
• Retail Sales: Headline decreased 0.9% on a month-over-month (MoM) basis (worse than the -0.6% expected); However, the control group, which excludes volatile components like food services, auto dealers and gasoline stations, increased 0.4%, which was above the +0.3% expected and up from -0.2% in the prior month.
• Leading Economic Indicators (LEI): -0.1% vs. -0.3% expected
• Building Permits: Dropped to 1393K from 1422K in the previous month and below the 1400K expected
• Housing Starts:  Decreased 9.8% from the prior month to 1256K, which was well below the 1350K expected.
• NAHB Housing Market Index: Dropped to 32 from 34, which represents the third lowest reading since 2012.
• Initial Jobless Claims: Dropped to 245K from last week's (upwardly revised) 250K, which was in-line with estimates. Continuing Claims decreased 6K from last week to 1.941M.
• The Atlanta Fed's GDPNow "nowcast" for Q2 GDP was revised down to +3.4% on June 18th from +3.5% on June 17th.

Treasury yields mostly saw modest declines on a week-over-week basis. Compared to last Friday, 2-year Treasury yields eased ~5 basis points (3.90% vs. 3.95%), 10-year yields are down ~5 basis points (4.37% vs. 4.42%), while 30-year yields are unchanged (4.90% vs. 4.90%).

Expectations around potential rate cuts from the Fed were little changed this week, likely due to the consistent message from the Fed. Per Bloomberg, expectations for a 25 basis point cut at the July FOMC have moved down to 16% from 20%, while the total 2025 expected 25 basis point cuts is up slightly to 2.06 from 2.02 (both on a week-over-week basis).

Last week I noted that the Russell 2000 (RUT) appeared to be breaking out from a (bullish) inverse head-and-shoulders pattern but needs to clear near-term resistance at the 200-day Simple Moving Average (2,173) before receiving a bullish technical assessment. Not much changed this week as the index traded mostly sideways, holding ground above the 2,100 level (or 20-day SMA if you prefer). Therefore, the RUT is in a "wait and see" mode until it registers a daily close or two above 2,173.

Near-term technical translation: bullish w/close above 2,173

The S&P 500 index (SPX) had a relatively quiet week and is on track for slight weekly losses. The recent sluggishness suggests slowing momentum and reinforces near-term resistance around 6,050-6100. The tentative price action is being driven by a combination of geopolitical uncertainty and a quickly approaching deadline of Trump's 90-day tariff pause on July 9th. Perhaps some healthy consolidation is needed before the index can muster another push towards all-time highs, but the near-term technical assessment is cautious for the meantime.

Near-term technical translation: slightly bearish

Earlier this week the U.S. Senate passed a key stablecoin bill, known as the GENIUS Act, by a vote of 68-30 and received bipartisan support. The landmark cryptocurrency bill establishes federal guardrails for U.S. Dollar-pegged stablecoins, consumer protections and helps provide a regulated pathway for private companies that want to issue stablecoins. As the bill currently stands, any companies issuing stablecoins would be required to fully back the token by liquid assets (such as the U.S. Dollar or short-term U.S. Treasuries), along with monthly audits and Anti-money laundering laws (AML). The bill still needs to be passed by the Republican-led House of Representatives before making its way to President Trump's desk for signing it into law.

The Bloomberg chart below shows the current % of members within the S&P 500 (SPX), Nasdaq Composite (CCMP) & Russell 2000 (RTY) that are trading above their respective 200-day Simple Moving Averages (SMA). In short, stocks are essentially unchanged on the week, but underneath the surface market breadth deteriorated. On a week-over-week basis, the SPX (white line) breadth moved down to 48.40% from 53.80%, the CCMP (blue line) dropped to 35.23% from 39.10%, and the RTY (red line) pulled back to 34.72% versus 39.10%.

Market breadth attempts to capture individual stock participation within an overall index, which can help convey underlying strength or weakness of a move or trend. Typically, broader participation suggests healthy investor sentiment and supportive technicals. There are many data points to help convey market breadth, such as advancing vs. declining issues, % of stocks within an index that are above or below a longer-term moving average or new highs vs. new lows.

This Week's Notable 52-week Highs (77 today): Cardinal Health Inc. (CAH - $0.63 to $164.77), EQT Corp. (EQT + $0.53 to $59.90), International Business Machines Inc. (IBM - $1.40 to $281.81), Jabil Inc. (JBL + $2.67 to $207.33), Roblox Corp. (RBLX - $0.90 to $101.70), Talen Energy Corp. (TLN + $0.97 to $291.35)

This Week's Notable 52-week Lows (40 today): Boston Beer Company (SAM + $0.20 to $201.75), Brown Forman Inc. – Class A (BF/A - $0.03 to $26.73), Clorox Company (CLX + $0.32 to $121.25), Constellation Brands Inc. (STZ + $0.15 to $160.15), Eagle Materials Inc. (EXP + $2.41 to $197.95), Thermo-Fisher Scientific Inc. (TMO - $0.46 to $392.10)