June 17th Market Overview

Happy Tuesday.

I think the the market is under-reacting to what's happening in the Middle East right now. We've gotten the big "V" recovery since tariff day and things have looked solid, but I really think we're being held up on a bit of air this week. Expecting a nasty red day coming if this Iran conflict doesn't get resolved quickly.

Today’s retail spending numbers are pretty concerning people are clearly pulling back on purchases, way to early for me to press the panic button on that though but just something I’m keeping in mind.

Let's dig in...

Executive Summary

1. Retail sales miss: May consumer spending dropped 0.9% versus the 0.6% decline economists expected. Excluding autos, sales still fell when analysts projected growth. The Fed now has fresh evidence of economic cooling as it starts its two-day meeting.
   

2. Solar stocks crushed: Senate Republicans kept their plan to kill wind and solar tax credits by 2028. Quick reference to this sector is the solar ETF $TAN ( ▼ 2.24% ) 
   

3. Geopolitics & oil: Crude futures jumped after Trump demanded Iran’s “unconditional surrender” and cut short his G-7 trip to manage the Middle East crisis. West Texas Intermediate closing near $75 per barrel.
   
   

Market Overview

Key Market Drivers

1. Fed Meeting: The FOMC started its two-day meeting with rate holders expected Wednesday. Today's retail sales miss gives Powell room to sound more concerned about the economy, though officials worry more about tariff impacts on inflation than economic cooling.
   

2. Trump escalates Iran threat: The president posted that the U.S. has "complete control of Iranian skies" before demanding unconditional surrender. Pentagon moved a third destroyer to the Mediterranean and sent a second carrier group toward the Arabian Sea. Oil futures spiked as Monday's ceasefire hopes evaporated.
   

3. Consumer spending cracked: Retail sales fell 0.9% versus the 0.6% decline economists expected. Excluding autos, sales dropped 0.3% when analysts projected a 0.1% gain. Building materials and garden equipment sales plunged 2.7% after growing 0.3% last month.
   
   Clothing stores provided the only bright spot, rising 0.8% after staying flat in April. The double miss suggests folks are pulling back spending beyond just tariff-driven auto shifts.
   
   

Stock Spotlight

Tesla $TSLA ( ▼ 0.67% ) declined as Wells Fargo reiterated underweight rating, projecting the company’s first negative free cash flow year since 2018.

Walmart $WMT ( ▼ 0.75% ) headed for its 10th straight losing session, tying the longest streak in company history dating back to 1972. Previous 10-day slides occurred in 1980 and 2004.

JetBlue Airways $JBLU ( ▼ 3.44% ) dropped after CEO Joanna Geraghty told staff that softer travel demand makes break-even operating margins “unlikely” this year.

Big Name Updates

Nvidia $NVDA ( ▲ 2.14% ) received a Barclays price target increase to $200 from $170, with the analyst citing $2 billion upside potential for July earnings. NVIDA plans to attend China’s supply chain expo in Beijing next month.

Amazon $AMZN ( ▼ 0.36% ) announced Prime Day 2025 will run four days from July 8-11, expanding the shopping event’s duration. CEO Andy Jassy warned employees that AI will reduce the company’s corporate workforce over time.

Meta $META ( ▼ 0.68% ) launched AI tools enabling advertisers to convert product images into auto-generated video ads with music and text. Wells Fargo projects $6 billion revenue boost from WhatsApp Status ads.

Microsoft $MSFT ( ▲ 0.13% ) faces OpenAI requests to reduce future revenue-sharing while surrendering rights to future profits in exchange for a stake in a restructured unit.

Other Notable Company News

Lennar $LEN ( ▼ 3.01% ) gained after mixed quarterly results showed falling average sales prices but overall metrics beating expectations in the challenging housing market.

Roku $ROKU ( ▲ 1.79% ) received a Loop Capital upgrade to Buy with $100 target following the Amazon advertising partnership announcement. The analyst expects positive financial impact starting next year.

Palantir $PLTR ( ▲ 1.52% ) faces new competition as OpenAI secured a $200 million Department of Defense prototype deal, its first major government contract nearly matching Palantir’s largest Maven deal.

Robinhood $HOOD ( ▲ 2.69% ) earned a Mizuho price target increase to $80 from $65, with the analyst citing ability to tap a $600 billion addressable market through new products and geographies.

Sector Watch

Bond Market

The 10-year Treasury yield held at 4.389% as investors moved into government bonds amid geopolitical uncertainty. Fidelity’s Jurrien Timmer emphasized that long-end movements matter more than Fed rate decisions since institutional borrowing relies on longer-term rates.

• Timmer warned “nothing good happens over 4.5%” for the 10-year yield

• Bond market reaction to tomorrow’s Fed statement could prove more significant than the rate decision itself

• Officials may signal concern about tariff impacts on inflation expectations

Policy Watch

Middle East Crisis: Trump positioned more military assets after demanding Iran surrender. Intelligence officials say Israeli strikes only delayed Iran's nuclear program by a few months - meaning this conflict isn't over. Oil markets will stay volatile.

Trade Deals: Trump and Canada's Prime Minister set a 30-day deadline to finish their trade agreement. Separately, Trump extended TikTok's deadline again and his team discussed tighter chip controls on China before recent trade talks.

Energy Policy Shift: Senate Republicans are killing renewable energy incentives by 2028 while keeping nuclear and hydropower credits until 2036. This explains today's solar stock massacre. House and Senate still need to reconcile differences, so watch for any changes that could affect renewable energy companies.

What to Watch

1. Middle East Escalation: Trump's next moves after demanding Iran surrender. Any Iranian response or further U.S. military action will move oil prices and market volatility. Watch crude futures for direction signals.
   

2. Solar Policy Changes: House and Senate need to reconcile their renewable energy proposals. Goldman says Sunrun $RUN, Enphase $ENPH, and SolarEdge $SEDG face the biggest hit if credits disappear. Any compromise could spark a sector bounce.
   

3. Holiday Trading: Markets close Thursday for Juneteenth with options expiration Friday. Shortened weeks plus OPEX often mean thinner trading and bigger price swings. I’m position sizes accordingly.
   

4. Consumer Spending Follow-Up: Today's retail sales miss raises questions about economic backbone. Watching for more data this week that either confirms or contradicts the spending weakness signal.

   
   
   Thanks for reading 🙂
   
   - John
   

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