Wall Street on Friday ended largely flat as the markets digested an escalating conflict between Israel and Iran and the Federal Reserve’s monetary policy decision of the year. The fighting between Israel and Iran intensified this week, with both countries targeting each other with waves of missile strikes. Markets started getting jittery on the expectation that the U.S. will likely launch an attack on Iran.
On Wednesday, the Fed decided to keep the key policy rate on hold with no change to interest rates. The committee’s updated economic projections for 2025 still showed two rate cuts, but key comments from the Fed Chair at the meeting were that growth expectations were revised lower, and unemployment and inflation estimates were bumped up. Fed Chair – Powell underscored that the uncertainty stemming from tariffs was still extremely high and cited that some or all the participants along the supply chain will have to pay for the tariffs which, in turn, could raise inflation readings from current levels.
For the week, the S&P slipped 0.2%. The Nasdaq added 0.2%, while the Dow ended flat.
Future Wealth’s View
Given the geopolitical and economic upheavals so far this year, we are pleasantly surprised that the first six months have held up roughly flat for investors. In the face of bloody conflicts stretching from Europe to the Middle East and Africa, a chaotic trade war and America’s deepening domestic crises, the S&P 500 is up 1.47% YTD, Dow is down 0.59% YTD and the Nasdaq is up 0.79% YTD.
As we come to the end of the first half of 2025, our outlook for the second half 2025 is one of a market looking for direction. In this environment, we believe that staying defensive, diversifying into international markets and investing in sectors other than the Mag 7 would be prudent.
With all the uncertainties that could derail the markets, our focus in managing our clients assets in the second half of 2025 will be capital preservation and patience.