The stock market experienced a downturn on Friday as investors monitored the latest developments from the Middle East and speculated on future interest rate cuts by the Federal Reserve. The S&P 500 fell by 0.22% to close at 5,967.84, marking the third consecutive losing session for the broad market index. The Nasdaq Composite dropped by 0.51% to finish at 19,447.41, while the Dow Jones Industrial Average gained 35.16 points, or 0.08%, closing at 42,206.82.
Federal Reserve Governor Christopher Waller’s comments helped the S&P 500 start the trading session on a higher note. He suggested the central bank might be in a position to cut interest rates as early as July. This outlook was slightly more optimistic compared to Fed Chair Jerome Powell’s earlier stance, in which he expressed a more cautious, data-dependent approach regarding rate cuts amid ongoing tariff discussions and their potential economic impacts.
Middle East tensions also played a significant role in the market’s decline. Israeli Prime Minister Benjamin Netanyahu reportedly ordered military strikes on strategic and government targets in Iran. These actions come as President Donald Trump contemplates U.S. involvement, raising geopolitical uncertainties.
Sam Stovall, chief investment strategist at CFRA Research, commented on the market’s volatility, stating, “With so much uncertainty going on in this world, who wants to go long over the weekend?” He noted that the S&P 500 is trading approximately 3% below its recent 52-week high and suggested that any easing of geopolitical tensions could be beneficial for the market. For the week, the S&P 500 was down by about 0.2%. The Dow eked out a 0.02% gain, while the Nasdaq advanced by 0.2%.
Several stocks reached new 52-week highs on Friday, with nine of them securing fresh all-time highs.
Market reacts to Middle East tensions
Notable mentions include companies that have maintained high levels since their IPOs in the last few decades.
Meanwhile, some stocks, such as Molson Coors and Constellation Brands, hit new 52-week lows, with trading levels not seen since late 2022 and May 2020, respectively. The Federal Reserve’s annual stress test for banks this year is expected to be less strenuous compared to the previous year, which should result in lower drawdowns in Common Equity Tier 1 ratios for most banks, according to analyst Betsy Graseck at Morgan Stanley. Ether ETFs have seen a resurgence, experiencing their sixth consecutive week of inflows.
Despite this, the price of ether has remained flat over the past month and has been slightly negative for June. JPMorgan has recommended buying the dip in Arista Networks, highlighting the potential upside despite the stock’s underperformance this year. Analyst Samik Chatterjee believes Arista will continue to keep pace with the AI networking market.
Circle extended its rally, spurred by the Senate passing the GENIUS Act, which proposes stablecoin legislation. Circle’s stock rose 18% and has gained more than 77% over the week. GXO Logistics surged over 11% after raising its full-year earnings outlook and appointing Patrick Kelleher as the new CEO.
CarMax jumped 6% following better-than-expected first-quarter results. Specialty building products stock GMS leaped 26% amid a reported bidding war involving multiple companies, including a $95.20 per share offer from billionaire Brad Jacobs and another undisclosed offer from Home Depot. The stock market closed a tumultuous week with mixed results across different indices.
Investors are closely watching geopolitical developments and the Federal Reserve’s next moves on interest rates to gauge the market direction in the coming weeks.
