The Iran-Israel war has plunged the stock market back into choppy waters. But investors seem unable to find a lifeboat that can carry them to safety.
The conflict has moved into a dangerous new phase after President Donald Trump called for Iran's "unconditional surrender," and stocks are feeling the pressure. Wall Street's most widely followed fear gauge -- the Cboe Volatility Index, or VIX -- jumped Tuesday to above 20, the level that tends to signal heightened volatility.
Still, investors' default safe haven didn't benefit from the chaos. Gold prices dropped -- only the 17th time out of 114 trading days this year that both bullion and the S&P 500 have fallen. Some analysts believe the precious metal is overvalued after a stellar run, so its recent drop could be a sign of things to come.
The U.S. bond market doesn't look like much of a refuge, either, with Treasury yields ticking up in recent months due to concern about Trump's signature tax bill.
The dollar is also struggling. Global fund managers haven't been this down on the greenback in at least two decades amid fears that sweeping tariffs could trigger a slump in U.S. growth, and that's put the dollar on pace for one of its worst first-half performances against its major peers on record.
In terms of trades, sitting tight might be the best strategy. To diversify now risks missing out on a stock market rebound if the Middle East conflict de-escalates -- or resolves in a way that brings about lasting peace in the region.
With Wall Street's go-to havens looking shaky, investors' best bet may be to hold their nerve and then ride the wave.
-- George Glover
***
Trump's Apparent Iran Escalation Brings Uncertainty Back
A series of social media posts by President Donald Trump, who departed early from the Group of Seven summit in Canada early Tuesday, had Wall Street worried again about an escalation in the Israel-Iran conflict and what that would mean for markets. Uncertainty has settled back in.
-- Earlier, traders were trying to separate signal from noise, but the gloom
returned after Trump demanded an unconditional surrender by Iran. Trump
met advisors for more than an hour in the White House Situation Room, and
reports said he was weighing options including a potential U.S. strike
against Iran.
-- Until Tuesday, U.S. has avoided overtly participating in Israel's strikes
on Iran, which began Thursday. Trump's visible wavering raises the risks
of damaging escalation, analysts say, even if he is merely bluffing.
Trump said patience was wearing thin and called Iranian Supreme Leader
Ayatollah Ali Khamenei an easy target.
-- Oil spiked. West Texas Intermediate climbed 4.3% to $74.84 a barrel, and
Brent crude, the international benchmark, added 4.4%, to $76.45 a barrel.
Brent is up nearly 20% so far this month, according to Dow Jones Market
Data.
-- As he left the G-7 meeting, Trump said the Iranian capital of Tehran,
home to around nine million people, should be "immediately" evacuated.
Energy markets are on edge over a potential blockage of the Strait of
Hormuz, a crucial oil and liquefied natural gas transportation route.
What's Next: Others weighed in on the Israel-Iran situation, too. Vice President JD Vance posted that the president may decide he needs to take further action, while German Chancellor Friedrich Merz said after meeting with Trump at the G-7 summit that U.S. participation in Israeli military strikes was discussed.
-- Matt Peterson, Liz Moyer, and Martin Baccardax
***
Retail Sales Weaker Than Expected in May as Fed Meets
Americans dialed back their spending in May after a burst of buying in April as they tried to get ahead of tariff price hikes, contributing to a steeper-than-expected 0.9% drop in retail and food services sales last month.
-- May's decline was driven by a continued pullback in car and car-part
sales, which fell 3.5% from the prior month after dropping in April.
Sales of building supplies and home-improvement products dropped 2.7%,
and restaurant spending dropped 0.9%.
-- The weak report came a day before the Federal Reserve is scheduled to
make its next interest-rate move, and release its revised economic
projections. Tariff and geopolitical uncertainties mean the Fed may not
make the two quarter-point rate cuts in 2025 that economists had forecast
earlier.
-- Bret Kenwell, an analyst at eToro, said the May retail sales report was a
"fairly tepid" headline number. The economy and the consumer are holding
up for now, he said, but there are "signs of vulnerability" that could
pose risks in the second half, especially if jobs or spending slows
further.
-- Notably the so-called control group of retail sales -- excluding autos,
gasoline, building materials, and restaurant dining -- gained 0.4% in May
from April, in line with expectations. That indicates the spending
component of real GDP growth is still on track for 2% annualized growth
in the second quarter.
What's Next: Bradley Saunders, Capital Economics' North America economist, attributes the weakness in May retail sales to "temporary drags from the end of tariff front-running" and the unseasonably wet weather in the eastern U.S. He expects the sales slump to reverse in June.
-- Megan Leonhardt and Janet H. Cho
***
Stablecoin Bill Gets Senate Approval with Bigger Crypto Goals in Sight
The Senate passed a bill Tuesday evening to regulate stablecoins. It's a victory the cryptocurrency industry has sought for years but crypto executives hope to persuade Congress to go further.
-- Lawmakers voted 68-30 on the Genius Act bill, with 18 Democrats joining
the bulk of Senate Republicans in favor of the legislation. The bill
cleared a key procedural hurdle in May and was expected to easily garner
the votes needed to pass.
-- The bill limits stablecoin reserves to safe, liquid assets, such as
Treasuries, clarifies how they're regulated, and creates a path for banks
to issue their own coins. It will now head to the House of
Representatives with some lawmakers hoping to get it to President Trump's
desk by the end of July.
-- Tether Holdings issues the largest stablecoin, USDT, which has a market
value of $155 billion. Circle Internet Group, which recently held an
initial public offering, issues the second-largest, USDC, with a $61.6
billion value.
What's Next: Some crypto industry executives want lawmakers to follow up the Genius Act with a much broader bill that tackles not just stablecoins but regulation for crypto trading platforms and other cryptocurrencies. The proposed Clarity Act would remove most tokens from the remit of the Securities and Exchange Commission.
-- Adam Clark and Joe Light
***
TikTok's Getting a New Lifeline. Some Question Whether That's Allowed.
The TikTok saga is getting new life for a third time. President Trump plans to sign an executive order this week extending for 90 days the platform's ability to stay available in the U.S. while it searches for a buyer. But some question whether Trump has the ability to do that.
-- White House press secretary Karoline Leavitt confirmed it, saying the
president has made it clear he doesn't want the popular video-sharing app
to go dark. The administration is working to ensure a deal is closed so
U.S. TikTok users can use it knowing their data is secure, she said.
-- TikTok was expected to go dark in January after former President Joe
Biden signed the Protecting Americans from Foreign Adversary Controlled
Applications Act, which banned TikTok from U.S. app stores if it wasn't
sold to an owner that isn't controlled by a foreign adversary.
-- Trump gave TikTok an extension in January, and again in April. Lawmakers
are concerned that the app, owned by Chinese company ByteDance, poses a
threat to national security by taking data from its 170 million U.S.
users. TikTok has denied this.
-- Nicholas Creel, associate professor of business law at Georgia College
and State University, says Trump doesn't have a legal basis to extend the
ban more than once. And Ben Michael, attorney at Michael & Associates,
told Barron's that it's a bit murky.
What's Next: A group of U.S. buyers had lined up before Trump announced his tariffs in April, derailing a deal. But Trump said in an interview with NBC last month that there is a group of purchasers, "very substantial people" who are going to pay a lot of money.
-- Angela Palumbo
***
Streaming Officially Edges Out Traditional Television
It's long been expected that streaming would one day surpass traditional television, and now that milestone has been reached. The amount of time people spent watching their favorite shows and movies on streaming edged out network and cable TV for the first time ever in May, boosted by older viewers.
-- It turns out, a generation of baby boomers, who are over 65, watch as
much YouTube as children younger than 11, according to Nielsen. Streaming
hit a record 44.8% of total TV usage last month versus the 44.2% combined
share of broadcast and cable TV.
-- Nielsen CEO Karthik Rao credited media companies for adapting programming
strategies for the shift. Viewers have been increasingly lured by popular
shows available only to subscribers on streaming platforms -- like
Netflix's Stranger Things, HBO Max's White Lotus, Peacock's Love Island
USA, and Apple TV's Severance.
-- Netflix is the largest subscription-based streamer, with 300 million
global subscribers, and 7.5% of all television viewing last month. But
Alphabet's YouTube dominated with 12.5% of television viewing in May, its
fourth-consecutive monthly share increase and the highest share of TV for
any streamer.
-- Media giants are splitting off TV and cable operations, the latest being
Warner Bros. Discovery. David Zaslav, who will stay as CEO of the stand
alone streaming and studio operations, will take a pay cut. His target
cash bonus will be $6 million to $12 million versus last year's $23.9
million.
What's Next: Netflix is following Walt Disney and Comcast into experiences, planning two 100,000-square-foot Netflix House theme spaces, one near Philadelphia and the other in Dallas, later this year. The Netflix facilities offer exhibits of popular shows such as Squid Game, themed food offerings, and merchandise.
-- Angela Palumbo and Janet H. Cho
***
Dear Quentin,
I really appreciate your column and the advice you provide. I have been considering "retiring" early to have more time with my husband during our younger years. We were both married for more than 20 years each. We met when I was 46 and he was 54. Our divorces did cause us quite a bit of financial loss, and we have $105,000 in combined debt, not including our house payment, which is $2,200.
I'm currently 51 years old, and my husband is 59. He is retired from a state job and receives a pension that nets around $3,600 per month, as well as lifelong health insurance for both of us. Once he reaches 62, we estimate his Social Security will provide approximately $1,800 net per month. In four months, he can cash out a Roth IRA, which would pay off our outstanding debt, minus our house.
I earn $129,000 per year. I contribute 15% to my 401(k), which is currently valued at $165,000. I also rolled over an old 401(k) with $125,000 to be managed by a financial advisor. Can I quit working in three years -- when my husband begins collecting Social Security? I plan to stop contributing to my 401(k) at that point. How much do you anticipate my account would be worth when I reach 59 1/2?
The money my financial advisor manages has been earning approximately 9% per year, and my employer matches 6% of my compensation. We would be downsizing our house and likely moving to a state with lower property taxes (we currently live in Texas). What do you think I should do? Should I retire early and join my husband on this new adventure? Thank you in advance for your advice.
-- The Wife
Read the Moneyist's response here.
-- Quentin Fottrell
***
-- Newsletter edited by Liz Moyer, Rupert Steiner
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 18, 2025 06:47 ET (10:47 GMT)
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