Markets Steady Despite Sluggish Data and Geopolitical Risks
Market Recap for the Week of June 22, 2025
The economic data released last week was quite lackluster. Retail sales fell by 0.9%, largely due to a significant drop in automobile sales. Some of this may be attributed to consumers purchasing vehicles in earlier months ahead of anticipated tariffs, effectively pulling demand forward and leading to weaker auto sales in May. Restaurant sales also declined by nearly 1%, signaling potential consumer weakness. Other indicators that fell during May included industrial production, building permits, and the broad-based Leading Economic Index. Bottom line: much of last week's data points to a slowing economy.
Uncertainty remains high regarding how the U.S. will respond to the conflict between Iran and Israel. President Trump stated he would make a decision within the next two weeks. Despite the tension, the U.S. stock market has not reacted negatively. However, any escalation could impact oil prices, and depending on the magnitude of that change, it may affect broader areas of the economy including inflation and interest rates.
Given the uncertainty, it's difficult to predict short-term movements in U.S. stocks. However, stock prices are inherently volatile over short periods. For investors who would be significantly affected by a sharp drop in their portfolio, it may be a good time to reassess allocations to other asset classes with lower correlation to equities. For those with a long time horizon, staying invested in a diversified stock portfolio has historically been the most effective strategy.
“Recent data signals slowing growth, but diversification and patience remain investors’ best defense.”
Chart of The Week
This week’s chart paints a fascinating picture of stock market returns over the past few years. There are three lines on the chart: blue represents returns of the Japanese stock market, green shows Europe, and black represents the U.S. market (S&P 500), excluding Nvidia. What's striking is that both Europe and Japan would have outperformed the U.S. market if Nvidia were excluded. This could be seen as a compelling case for continuing to hold non-U.S. stocks.
The commentary in this blog is for informational purposes only and should not be taken as personalized investment advice
Chart Source: FactSet, MSCI, J.P. Morgan Asset Management. (Left) Graph was made by ranking all the companies in the MSCI All Country World Index by performance on a yearly basis and determining the top 50 performers using their total return in USD. Companies are listed in no particular order. Excluding companies with a market capitalization that does not make up at least 0.01% of the MSCI All Country World Index in the year shown. (Right) Oct. 12, 2022, was the market bottom for U.S. equities.
Guide to the Markets – U.S. Data are as of June 18, 2025.
