Closing Recap 

U.S. stocks finished lower for a second consecutive day as weak retail sales and industrial production data fueled economic concerns ahead of tomorrow’s FOMC meeting; oil surged on escalating Middle East tensions, gold eased slightly, and Treasury yields fell. 

Key Takeaways 

• Stocks Decline on Weak Data: Major indices slipped (S&P -0.84%, Nasdaq -0.91%) as disappointing May Retail Sales and Industrial Production reports heightened worries about economic slowing. 
• Geopolitical Uncertainty Lingers: Ongoing Israel-Iran conflict and uncertainty around President Trump’s stance on U.S. involvement kept a cautious tone in markets. 
• Focus on FOMC Meeting: Investors adopted a defensive posture ahead of Wednesday’s Federal Reserve policy decision and economic projections. 
• Oil Surges on Middle East Tensions: WTI crude jumped over 4% as attacks between Israel and Iran continued, and President Trump made new comments on the situation. 
• Gold Eases Slightly: Gold prices pulled back modestly, despite broader risk aversion, as some analysts suggest safe-haven demand may have peaked. 
• Yields Fall Sharply: Treasury yields declined significantly across the curve, with the 10-year falling over 6 basis points, reflecting flight to safety and reaction to weak economic data. 
• Sentiment Still “Greed” but Caution Grows: Fear & Greed Index remained in Greed, but sell-side ratings and analyst commentary highlight increasing uncertainty. 
• Retail Sales & Industrial Production Miss: May Retail Sales fell -0.9% (vs. -0.7% est.), and Industrial Production declined -0.2% (vs. +0.1% est.), signaling economic headwinds. 

Market Overview 

U.S. equity markets extended their losses for a second day, with selling pressure evident throughout the session as investors digested a fresh round of disappointing economic data and navigated ongoing geopolitical uncertainties ahead of tomorrow’s crucial Federal Reserve policy meeting. Futures were already soft overnight due to renewed concerns about President Trump’s position on U.S. involvement in the escalating Israel-Iran conflict, and further attacks by both sides. 

Index	Up/Down	% Change	Last
DJ Industrials	-299.29	-0.007	42215
S&P 500	-50.39	-0.0084	5982
Nasdaq	-180.12	-0.0091	19521
Russell 2000	-22.17	-0.0101	2101

The release of weaker-than-expected May Retail Sales, which declined -0.9% month-over-month, and a surprise drop in May Industrial Production (-0.2%), amplified concerns about a slowing U.S. economy. This data, coupled with still-elevated inflation components in recent reports, makes the Fed’s job increasingly difficult. Market breadth was negative for most of the day, with decliners outpacing advancers by a significant margin. While the Fear & Greed Index remained in “Greed” territory, the sell-side upgrade/downgrade ratio continued to tilt negative, reflecting growing analyst caution about the market outlook amidst tariff impacts and potential margin squeezes. 

Energy was the only S&P sector to finish in positive territory, buoyed by a sharp rally in crude oil prices. Oil surged on the escalating Middle East tensions, particularly after President Trump’s comments on the Iran situation. Conversely, Consumer Discretionary, Health Care, and Materials were among the notable underperformers. Investors are now squarely focused on the FOMC’s announcement and Chair Powell’s subsequent press conference tomorrow for clarity on the central bank’s assessment of the economy and its policy path.

Economic Data

Economic data released yesterday was  largely disappointing, pointing to a slowdown in consumer spending and industrial activity. 

• Retail Sales (May): Declined -0.9% m/m (Consensus: -0.7%). Ex-autos, sales fell -0.3% (vs. +0.1% est.). Ex-autos/gas, sales fell -0.1%. Gasoline sales -2.0%. 
• Import/Export Prices (May): Import prices were unchanged m/m (vs. -0.2% est.). Export prices fell -0.9% m/m (vs. -0.2% est.). YoY, import prices +0.2%, export prices +1.7%. 
• Industrial Production (May): Fell -0.2% m/m (Consensus: +0.1%). Capacity Utilization declined to 77.4% (Consensus: 77.7%). 

Commodities, Currencies, and Treasuries

Gold futures settled slightly lower, down $10.40 (-0.3%) at $3,406.90 per ounce, in a relatively subdued session after recent strong gains. Citi analysts issued a note suggesting gold’s rally might be its “last hurrah,” with potential for a significant pullback next year if trade deals materialize and safe-haven demand wanes. Crude oil prices surged, with WTI gaining $3.07 (+4.28%) to settle at $74.84/bbl. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	3.07	USD/bbl	74.84
Brent	3.22	USD/bbl	76.45
Gold	-10.4	USD/oz	3406.9
EUR/USD	-0.0077	USD	1.1484
USD/JPY	0.51	JPY	145.23
10-Year Note	-0.061	%	0.04393

The rally was driven by escalating tensions between Israel and Iran, including ongoing attacks and President Trump’s comments on the situation, which stoked fears of supply disruptions. The U.S. dollar index saw mixed movement, weakening against the Euro but gaining against the Yen. Treasury yields fell sharply across the curve ahead of the Fed meeting, reacting to the weak economic data. The 10-year yield dropped over 6 basis points to 4.390%, its largest one-day decline in a couple of weeks, while the 2-year yield also declined.

Looking Ahead 

All eyes are now squarely on the Federal Reserve’s policy announcement and Chair Powell’s press conference tomorrow afternoon. While no change in interest rates is expected, the Fed’s updated economic projections (dot plot) and Powell’s commentary on inflation, growth, and the impact of tariffs will be critical for market direction. Geopolitical developments in the Middle East will also continue to be a key driver, particularly for oil prices. Q1 earnings season is largely over, but any remaining reports will be monitored for insights into corporate health.