Geopolitical Tensions Sink Markets; Retail Sales, Industrial Production Miss Expectations
Markets reversed gains Thursday as escalating Middle East tensions and weak U.S. retail and industrial data triggered broad selling, with energy the lone sector in the green.
Geopolitical Fears and Weak Data Spark Sell-Off; Energy Stocks Gain Amid Oil Rebound
Markets sold off sharply Thursday as risk sentiment deteriorated following heightened geopolitical tensions and disappointing U.S. economic data. The S&P 500 closed below the 6,000 mark, giving back recent gains as volatility surged and safe-haven assets gained strength.
🔥 Trump Abruptly Exits G-7 Over Iran Escalation
The session opened with a cautious tone after President Trump abruptly left the G-7 Summit, citing an urgent need to return to Washington amid the evolving conflict between Israel and Iran. Trump urged evacuation from Tehran and later stated on Truth Social that the U.S. knows the location of Iran’s Supreme Leader but will refrain from action “for now,” warning that “our patience is wearing thin.”
These comments triggered risk-off behavior, pushing investors out of equities and into Treasuries and the U.S. dollar, with the 10-year yield falling to 4.39% and the Dollar Index rising 0.8% to 98.76.
📉 Sector Performance: Red Across the Board, Except Energy
All S&P 500 sectors closed lower, except for Energy (+1.0%), which benefited from a rebound in WTI crude futures (+2.0% to $73.27).
Health Care (-1.6%) led the decline amid talks of stricter pharmaceutical ad regulations and Medicaid cuts.
Eli Lilly (LLY) fell -2.02% after announcing a $1B+ acquisition of Verve Therapeutics, which soared +81.5%.
Consumer Discretionary (-1.6%) also underperformed, with homebuilders hit hardest after Lennar (LEN) reported an earnings miss and the NAHB Housing Market Index dropped to 32, its lowest since the pandemic.
The CBOE Volatility Index (VIX) jumped +12.7% to 21.54 as decliners outpaced advancers 2-to-1 across both the NYSE and Nasdaq, confirming the shift toward risk aversion.
📊 Economic Data: Retail and Industrial Activity Disappoints
Retail Sales declined -0.9% MoM in May (consensus -0.6%), marking the second straight monthly drop. Excluding autos, sales fell -0.3%.
Discretionary spending dropped across categories including electronics (-0.6%) and restaurants (-0.9%), although apparel sales (+0.8%) bucked the trend.
The data reinforces the narrative of consumer caution and supports arguments for Fed rate cuts.
Industrial Production fell -0.2% MoM, while capacity utilization slipped to 77.4%, below expectations.
Despite earlier tariff pauses, output remained sluggish, underscoring uncertainty and slowing growth momentum.
Import/Export Prices were flat or declined, signaling weak global trade dynamics.
📉 Major Indices Year-to-Date
S&P 500: +1.7%
Nasdaq Composite: +1.1%
Dow Jones: -0.8%
S&P Midcap 400: -3.4%
Russell 2000: -5.7%
🌍 Global Markets & Commodities
Europe: Mixed
Asia: Broadly lower
Commodities:
Crude Oil: +2.0% to $73.27
Gold: +58.00 to $3402.20
Silver: +0.03 to $36.30
Copper: +0.02 to $4.84
📦 After-Hours: Plains All American Divests NGL Business
Plains All American (PAA) announced after the bell that it will sell its NGL business to Keyera, a Canadian energy infrastructure company. The deal reflects ongoing portfolio optimization in the midstream space and signals confidence in demand for natural gas liquids as global energy dynamics evolve