Wednesday, June 18, 2025 Fed Watch & Geopolitical Tensions!

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Market Summary for Tuesday, June 17, 2025
Outlook for Wednesday, June 18, 2025
Tuesday Market Recap:

Market Performance: The market experienced a down day, closing down 0.84%, with the S&P 500 finding support at S2 (5,982) after opening above 6,000 but failing to breach 6,020. Prices remain above the 20, 50, and 200-period moving averages, indicating a positive overall trend despite the decline.

Economic Data: Weaker-than-expected economic reports fueled market concerns:

Retail sales dropped 0.9% (expected -0.6%).

Industrial production fell 0.2% (expected +0.1%).

Capacity utilization at 77.4% (expected 77.7%).

NAHB Housing Market Index at 32 (expected 36).

Import and export prices also underperformed expectations.

Geopolitical Concerns: Rising tensions, particularly the Israel-Iran conflict, contributed to market unease. President Trump's abrupt departure from the G7 summit and comments about evacuating Tehran heightened fears. Speculation about U.S. involvement, possibly with bunker-busting bombs, added uncertainty. Oil prices rose to the mid-70s on fears of Strait of Hormuz disruptions, and the VIX climbed above 20 (21.6), signaling increased volatility.

Market Internals: Momentum oscillators are drifting lower, reflecting uncertainty. The S&P 500 bullish percent index is negative, while the NASDAQ 100 remains extreme positive but declining. Short-term indicators such as the StochRSI are extreme negative, and smart money indicators (e.g., Chaikin Money Flow) are negative. Volume remains below average, and sentiment dropped from positive to neutral (54 from 62).

Sector Performance: Energy was the only sector up, while discretionary and communication sectors saw significant declines. Large-cap growth stocks outperformed value stocks, but small and mid-caps weakened.

Other Areas: The 10-year yield fell to 4.39% (from 4.42%), and the dollar rose. The MSCI World Index saw a notable pre-open decline, indicating a global shakedown.

Wednesday Outlook (June 18, 2025):

Key Focus: The Federal Reserve's announcement at 2 p.m. Eastern, including the SEP report, statement, and Jerome Powell’s press conference, will be the primary market driver. The market expects a 99% chance of no rate cut, with attention on Powell’s tone and forward guidance.

Economic Data: MBA Mortgage Applications Index, housing starts, and building permits will provide housing sector insights.

Market Sentiment: Remains positive but not trending, with neutral to positive bias for the S&P, positive for NASDAQ, and neutral to negative for the Dow. Options expiration and a market closure on Thursday (June 19) may influence dynamics.

Geopolitical Risks: Ongoing Israel-Iran tensions and potential U.S. involvement remain significant variables impacting sentiment.

Technical Levels: Watch pivot points, the 20-period moving average is critical if declines persist. The growth-to-value ratio and other technical indicators suggest vulnerability but no clear breakdown yet.

Conclusion:

The market remains positive but lacks a strong trend, with geopolitical concerns and Fed announcements driving sentiment. Weak economic data and rising volatility add caution, but dip-buyers are active, and technicals suggest resilience unless further declines break key supports.

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DISCLAIMER This video is for entertainment purposes only. I am not a financial adviser, and you should do your own research and go through your own thought process before investing in a position. Trading is risky!