Market Pulse: Weekly Review

Fresh news and strategies for traders. SPY Trader episode #1255. Hey there, Spy Traders! Cashflow Charlie here, and it's 6 am on Saturday, June 21st, 2025, Pacific Time. What a week it's been in the markets, folks! We've navigated everything from geopolitical fireworks to the Federal Reserve's latest pronouncements. So grab your favorite morning beverage, because we're about to break down all the action from the past few days. Let's dive right into the market performance. This past week, ending June 20th, saw a bit of a mixed bag. The Morningstar US Market Index slipped slightly, down 0.07%. The S&P 500, our trusty benchmark, edged down 0.15%, marking its second week of modest losses, closing at 5,967.84 on Wednesday and falling again on Thursday. The Nasdaq Composite, however, managed a small gain of 0.21% for the week, despite a dip on Thursday. And our old friend, the Dow Jones Industrial Average, just barely budged, inching up 0.1% for the week. So, pretty much treading water, wouldn't you say? Now, looking at specific sectors, Financial Services had a great run, up 0.89%, with Energy right behind, gaining 0.87%. On the flip side, Healthcare was the weakest, dropping 2.43%, and Basic Materials also struggled, down 1.33%. Interestingly, largecap stocks saw a small loss, while midcap and smallcap stocks actually gained, and growth stocks performed better than value or blend. On the macroeconomic front, geopolitical tensions, especially the IsraelIran conflict, kept us on our toes. Early in the week, stocks dipped as oil prices surged due to supply concerns, but then bounced back a bit when talks of negotiations emerged. By Thursday, President Trump's comment about a twoweek window for a decision on military involvement helped oil prices retreat. This situation is definitely a big influencer. Then we had the Federal Reserve. Their June 2025 FOMC meeting wrapped up on June 18th, and as widely expected, they kept the benchmark interest rate steady at 4.25% to 4.5% for the fourth meeting in a row. They acknowledged solid economic expansion, a low unemployment rate, and a healthy labor market, but noted that inflation remains 'somewhat elevated'. The Fed actually revised down its 2025 GDP growth forecast to 1.4% and bumped up its core inflation forecast to 3.1%. However, the 'dot plot' still pointed to two quarterpoint rate cuts in 2025. Fed Chair Powell highlighted continued growth but also elevated uncertainty. Speaking of data, the May 2025 CPI came in at 2.4% annually, slightly up from April but below forecasts, thanks in part to a 12% yearoveryear drop in gasoline prices. The May jobs report showed 139,000 nonfarm payrolls added, just above expectations, with unemployment holding at 4.2%. But, watch out for those revisions, folks, as March and April job gains were actually reduced by 95,000, hinting at a potential cooldown in the labor market. Average hourly earnings rose 3.9% yearoveryear. Other indicators like retail sales, industrial production, and homebuilder confidence all came in weaker than expected on Monday, and the New York Fed Manufacturing Index declined for the fourth month in a row. And let's not forget tariffs. The 2025 tariffs are estimated to raise overall prices by 1.5% in the short run and could cut real GDP growth by 0.6 percentage points this year. They might also increase unemployment by 0.3 percentage points and reduce payroll employment by 394,000 by yearend. This is a big deal, especially with May's manufacturing employment showing weakness partly due to these trade tensions. Now for some companyspecific news. Kroger surged almost 10% on Thursday after beating profit estimates and raising its fullyear revenue forecast. CarMax also climbed 6.6% on Thursday, beating profit expectations on higher used auto sales. Advanced Micro Devices, AMD, jumped nearly 9% last Sunday after analyst upgrades. Meta Platforms rose 3% last Sunday on news of paid advertising for WhatsApp. Apple, defying the trend, rose more than 2% on Thursday, and Coinbase also saw a nice 4% gain on Thursday. But it wasn't all sunshine and rainbows. Solar stocks really took a hit on Monday, with Enphase Energy plunging 24%, First Solar down 18%, SunRun plummeting a massive 40%, and SolarEdge Technologies sliding 33%. Ouch! Lennar shares fell 4% on Monday after their profit missed estimates. And Sarepta Therapeutics dropped a whopping 45% last Sunday, hitting a nearly decadelow, due to concerns about a possible serious side effect with their Elevidys treatment, including a reported death. Accenture also fell on Thursday as their quarterly bookings missed analyst estimates. So, what does all this mean for us, Spy Traders? The past few days show a truly complex market. Geopolitical tensions in the Middle East are a major wild card, directly hitting energy prices and broader market mood. The Fed's decision to hold rates steady, alongside a more cautious economic outlook, tells us they're still walking a tightrope: inflation is stubborn, even with signs of a cooling labor market. That May jobs report, with its downward revisions, really highlights this cooling trend. The slight uptick in CPI and the Fed's higher inflation forecast underline that price pressures are still very much a concern, made worse by ongoing tariffs. The mixed performance across major indices, with the S&P 500 slightly down but Nasdaq and Dow holding relatively flat, suggests a market trying to figure out these conflicting signals. Sector performance showed a clear rotation: Financial Services and Energy benefiting, possibly from rates and oil volatility respectively, while Healthcare and Basic Materials struggled. And, of course, individual company news, whether it's strong earnings like Kroger or CarMax, or serious operational issues like those seen with Sarepta and the solar industry, continues to drive big stock movements. We're definitely in a 'waitandsee' mode, balancing resilient economic activity against inflation, tariffs, and a super fluid global landscape. Alright, Cashflow Charlie's top recommendations for navigating these waters: First, Stay Diversified and Defensive. With all this uncertainty and mixed economic signals, don't put all your eggs in one basket. Maintaining a diversified portfolio is key. While Healthcare surprisingly underperformed recently, defensive sectors like consumer staples or utilities might be worth a look if volatility sticks around. Healthcare might even present a potential entry point if its fundamentals hold strong after that recent dip. Second, Monitor Geopolitical Developments Closely. The IsraelIran conflict is a huge unknown. Keep a very close eye on any escalations or deescalations. This will continue to directly impact oil prices and overall market sentiment, making the Energy sector particularly sensitive. Third, Evaluate Interest Rate Sensitivity. The Fed held rates, but their projections still hint at future cuts. Financials might continue to do well if rates stay a bit higher for longer, or if economic resilience supports loan growth. On the flip side, interestrate sensitive sectors, like real estate, could face ongoing pressure if borrowing costs remain elevated. Fourth, Focus on Company Fundamentals. With tariffs and inflation impacting corporate outlooks, it's more critical than ever to dig deep into individual company earnings and their future guidance. Kroger and CarMax showed us that strong individual performance can still lead to big gains, even in a tough market. But remember, companies with specific product or operational issues, like Sarepta, can see very sharp declines. Finally, Be Cautious on Highly Valued Growth Stocks, but also Consider Value Opportunities. While the Nasdaq has been resilient, and some tech giants are still flying high, the broader tech and growth sector might face more scrutiny if inflation or slower growth fears intensify. However, companies showing strong innovation, especially in AI like AMD, still attract investor interest. And with the overall US stock market trading at only about a 3% discount to fair value, opportunities in valueoriented investments, or in sectors that have lagged but have strong longterm fundamentals, like possibly healthcare after its recent drop, might be emerging. So, Spy Traders, stay agile, prioritize your fundamental analysis, and keep that portfolio diversified. That's it for this edition of Spy Trader. Until next time, keep those charts green!