TLDR
- Federal Reserve Chair Jerome Powell will testify to Congress on Tuesday and Wednesday following last week’s decision to hold interest rates steady
- May PCE inflation data releases Friday, showing the Fed’s preferred inflation measure and whether it continues trending toward the 2% target
- Major earnings reports this week include Nike (Thursday), FedEx (Tuesday), and Micron Technology (Wednesday)
- US military struck three sites in Iran on Saturday, marking first direct US involvement in the Israel-Iran conflict that began June 13
- Markets will likely focus on geopolitical tensions over economic data, with oil prices up 10% since the conflict started
Financial markets enter a pivotal week as geopolitical tensions overshadow economic data releases. The US military struck three Iranian sites on Saturday, marking America’s first direct involvement in the Israel-Iran conflict that escalated on June 13.
President Trump’s full address to the nation from The White House following the U.S. military strikes Iran. pic.twitter.com/6ghmPfXvmI
— America (@america) June 22, 2025
President Trump suggested further action could follow if “peace does not come quickly.” The strikes represent a major escalation that will likely dominate market sentiment in early trading.
Oil prices have climbed roughly 10% since the conflict began, with West Texas Intermediate futures trading around $75 per barrel on Friday. Energy commodity pricing will be key for equity markets going forward.
The S&P 500 fell 0.15% last week while the Nasdaq gained 0.2%. The Dow finished slightly above flat in the holiday-shortened trading period.
Fed Policy Takes Center Stage
Federal Reserve Chair Jerome Powell will deliver his semiannual testimony to Congress starting Tuesday. He will appear before the House Financial Services Committee on Tuesday and the Senate Banking Committee on Wednesday.
The testimony follows last week’s Federal Open Market Committee meeting where officials held interest rates steady. The central bank projects 50 basis points of rate cuts by year-end, or two reductions.
Several other Fed officials will also speak throughout the week. Powell may face criticism from Trump allies who want lower interest rates.
The Fed’s Summary of Economic Projections revised up inflation forecasts while lowering growth expectations. This raised concerns about potential stagflation where growth slows while inflation stays above the 2% target.
Key Economic Data on Tap
Friday’s Personal Consumption Expenditures report for May will provide crucial inflation data. Economists expect annual core PCE at 2.6%, up from April’s 2.5%.
Core PCE excludes volatile food and energy categories and represents the Fed’s preferred inflation measure. Monthly core PCE is projected at 0.1%, unchanged from May.
Other economic releases include manufacturing and services activity data, consumer confidence readings, and the final first-quarter GDP revision. New home sales and durable goods orders will also be reported.
The Chicago Fed activity index and S&P Global PMI data release Monday. Consumer confidence and housing price data come Tuesday.
Corporate Earnings Focus
Athletic apparel giant Nike reports Thursday after warning about tariff impacts in its previous quarterly update. The Dow 30 member has faced declining revenue and earnings.
FedEx releases results Tuesday following warnings about lower revenue and profits. Investors watch FedEx closely as shipping volumes indicate economic health and global trade activity.
Micron Technology reports Wednesday after pledging $200 billion to boost US semiconductor production. The chipmaker’s results will be watched for industry trends.
Carnival Corporation also reports quarterly results this week. Tesla’s robotaxi service may launch Sunday in Austin, Texas, though past product updates have faced delays.
The conflict between Israel and Iran has shown limited market impact so far, but weekend US strikes could change this dynamic. Research suggests oil prices would need to reach $120 per barrel to significantly impact economic growth.
The S&P 500 remains near record highs but has failed to surpass its February 19 close of 6,144.15 for several weeks.
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