Schwab Market Update

Published as of: June 13, 2025, 9:08 a.m. ET

(Friday market open) Investors fled riskier investments and embraced perceived safety after Israel attacked Iran last night. The dollar, volatility, and gold rose, while many tech and Magnificent Seven stocks retreated even as crude oil spiked along with defense industry names. Israel warned it's not done, potentially keeping pressure on global markets amid concerns of a wider war, though to date the U.S. isn't involved.

With earnings relatively light and trade negotiations fading to background noise at least for now, the Middle East doesn't have much competition for Wall Street's attention. Though major indexes rebounded from overnight lows and volatility eased from early peaks, investors could be wary of taking new long positions before the weekend as risk-off sentiment mounts. At least early on, selling was evident across most sectors, with little sign of investors jumping into so-called defensive areas like staples, health, and utility stocks.

Climbing crude—which initially surged double digits and remained up 8% ahead of the open as Iran is a huge producer—could add to any tariff-generated inflation, putting the Federal Reserve in a bind as it meets next week to decide rates. Recent softer jobs and inflation growth point toward a slowing economy, but rate cut odds remain below 4% early Friday, according to the CME FedWatch Tool. Before Israel's attack, which it said was necessary to prevent Iran from developing nuclear weapons, stocks were up this week amid trade optimism, solid demand for U.S. debt, and softer U.S. inflation data. Now the rally is in jeopardy.

1. Sentiment ahead amid signs of improvement: Today's June preliminary University of Michigan consumer sentiment report, due at 10 a.m. ET, comes after several recent surveys showed improvement in so-called "soft" data. This includes a small business survey earlier this week and May consumer confidence last week. These soft data points had mostly collapsed in April as businesses and consumers fretted about the possibility of inflation and a recession associated with tariff policy. "So far we just haven't seen the tariffs in the actual inflation data yet," said Collin Martin, director, fixed income strategy at the Schwab Center for Financial Research. "Companies may be holding off passing the increases along since they aren't sure how long the tariffs will be around. Although that can't go on forever." The last consumer confidence report saw inflation expectations fall slightly, and the inflation expectation metric in today's sentiment report is important to monitor. Headline sentiment is seen at 53, up from 52.2 in May but still historically low.
    
2. Fed might juggle competing trends: This week's benign Consumer Price Index (CPI) and Producer Price Index (PPI) data could be subjects of interest when the Federal Open Market Committee (FOMC) meets next week. The same is true of rising initial and continuing jobless claims. The fact that tariff price pressure hasn't built even as the job market and consumer demand appears to be softening may get some attention from policy makers. However, Treasury yields climbed today amid worries about crude possibly raising inflation. May retail sales, due next Tuesday also will be a fresh data point for the central bank. A weak sentiment report might suggest soft retail sales after just a 0.1% monthly rise in retail sales for April that saw the pace of spending on goods decelerate. Speaking of monetary policy, 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. Uncertainty over tariffs and now the Middle East could keep the BOJ cautious.
    
3. Stagflation concerns linger: Recent data didn't calm concerns about possible stagflation, in which economic growth slows as prices rise. Stagflationary trends showed up in recent projections from the Organization for Economic Cooperation and Development (OECD), which sees U.S. gross domestic product (GDP) slowing from 2.8% in 2024 to 1.6% in 2025, with inflation at nearly 4% by year-end due to higher import costs. Tariffs of 15% are the highest since the late 1930s Great Depression era. At the same time, the U.S. services economy is slowing. The Institute for Supply Management (ISM) Services PMI® unexpectedly fell into contraction territory for the first time in nearly a year. "Notably, its price index jumped to its highest level since November 2022," said Liz Ann Sonders, chief investment strategist at Schwab, and Kevin Gordon, director, senior investment strategist at Schwab, in their mid-year outlook this week. "Readings like this, were they to persist, could keep 'stagflation' on economists' and investors' radar screens in the second half of the year."

• Tesla (TSLA) fell nearly 1% and Nvidia (NVDA), Amazon (AMZN), Advanced Micro Devices (AMD), and Palantir (PLTR) also slipped 1% to 2% in pre-market trading as investors appeared to shy from growth names in the aftermath of Israel's strike on Iran. Tesla also felt pressure from Trump signing a joint resolution of Congress to eliminate California's ability to regulate its air emissions, Barron's reported.
   
• Other popular names losing ground in the risk-off action included AppLovin (APP), Super Micro Computer (SMCI), and Meta Platforms (META).
   
• Lockheed Martin (LMT) rose 3.3% and Northrop Grumman (NOC) climbed 4.8% in pre-market trading as fighting flared between Israel and Iran. Defense names often rally in times of war.
   
• Exxon Mobil (XOM) rose 2.7% and Chevron (CVX) surged 2.3% in the early going as crude oil soared to $73 per barrel, up from recent trading in the low-$60's. There's concern Iran could take military action to hurt crude oil exports. One factor pointing against a possible huge spike in oil prices is abundant supplies.
   
• The Cboe Volatility Index (VIX) rallied more than 10% following the attack on Iran after falling about 60% over the last two months. Futures trading at the Cboe suggests VIX could remain above the historic average of 20 through the rest of the year, possibly a warning of choppiness ahead.
   
• Airline stocks including United Airlines (UAL) and Delta Air Lines (DAL) fell sharply, more than 5% early on, as the Middle East conflict raised concerns about travel demand.
   
• Adobe (ADBE) dropped 3.3% ahead of the open even though the software company beat analysts' consensus on earnings and revenue and raised full-year guidance. Market participants appeared to have been hoping for even better numbers.
   
• Arista Networks (ANET) dropped 2.4% early Friday amid general risk-off trading after rising 1.4% yesterday despite a lack of notable fresh news. Shares haven't recovered to near their early-2025 highs.
   
• Bitcoin (/BTC) slipped 1.8% in the early going even as gold (/GC) rose 1% and the U.S. dollar ($DXY) rose 0.5% following Israel's attack on Iran. Shares of crypto-related names like Coinbase Global (COIN) and Strategy (MSTR) each fell more than 1%. Crypto seemed to sink in the general risk-off atmosphere.
   
• Boeing (BA) dropped almost 1% after falling about 5% Thursday after yesterday's Air India crash of a Boeing 787. GE Aerospace (GE) fell another 1.7% after dropping 2.6% Thursday, as its engines powered the jetliner. Shares of Spirit AeroSystems (SPR), which builds fuselages for Boeing, also fell Thursday.
   
• Cardinal Health (CAH) was flat after rising 4.5% yesterday when the company raised its earnings forecast for the current fiscal year. In its investor day slide deck, the company cited "significant progress in mitigating tariff exposure."
   
• Oracle (ORCL) inched down after a 13% advance Thursday as investors cheered its better-than-expected earnings and forecast.
   
• Chewy (CHWY) dropped 0.5% after a 1.5% rise yesterday as it outpaced analysts' earnings and revenue forecasts.
   
• Chime Financial (CHYM), which climbed sharply yesterday following its initial public offering (IPO), gained another 0.6% early Friday. Its shares opened at $43 Thursday, about 60% above the IPO price of $27 and continued a string of recent strong IPOs.

Munis and the tax bill: As the Republican budget plan gets debated in the Senate, investors may want to check possible tax-code changes that could affect municipal bonds, said Cooper Howard, director, fixed income strategy at the Schwab Center for Financial Research. Check out his new analysis, in which he wrote the bill likely won't reduce the appeal of munis for high-income earners.

The tech-heavy Nasdaq-100^® (NDX—candlestick) trades well above its 200-day moving average (blue line), and its 50-day moving average (red line) is beginning to catch up with the 200-day. If the 50-day crosses over the 200-day, that would likely be seen as a bullish technical sign. However, the Relative Strength Index (RSI—bottom chart) for the NDX is approaching recent highs at close to 68, suggesting it may be near what are commonly seen as overbought areas. 

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

June 9: Expected earnings from Casey's General (CASY).
June 10: Expected earnings from GameStop (GME) and Stitch Fix (SFIX).
June 11: May Consumer Price Index (CPI) and expected earnings from Chewy (CHWY).
June 12: May Producer Price Index (PPI) and expected earnings from Adobe (ADBE).
June 13: Preliminary June University of Michigan Consumer Sentiment.