TLDR
- Jerome Powell delivers semiannual congressional testimony Tuesday and Wednesday after Fed held rates steady last week
- Critical May PCE inflation report drops Friday – Fed’s preferred gauge to show if price pressures continue cooling toward 2% target
- Corporate earnings spotlight on Nike Thursday, FedEx Tuesday, and Micron Wednesday as companies assess tariff impacts
- Weekend US military strikes on Iran mark first direct American involvement in conflict that started June 13
- Geopolitical risks may overshadow economic data with crude oil jumping 10% since Middle East tensions began
Markets enter a turbulent week as weekend US military action against Iran threatens to overshadow key economic events. American forces struck three Iranian targets Saturday night in the first direct US involvement since hostilities erupted 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
The strikes represent a major escalation in Middle East tensions. President Trump indicated additional military action remains possible if regional stability doesn’t improve quickly.
Financial markets showed muted reactions to the conflict initially, but direct US participation changes the risk calculus. The S&P 500 declined 0.15% last week while technology stocks posted modest gains.
Energy markets have already responded to the crisis. Crude oil prices jumped roughly 10% since fighting began, with benchmark futures trading near $75 per barrel Friday.
Congressional Spotlight on Fed Policy
Federal Reserve Chairman Jerome Powell faces lawmakers in his scheduled semiannual testimony starting Tuesday. The House Financial Services Committee hosts Powell Tuesday, followed by Senate Banking Committee appearance Wednesday.
The hearings come after last week’s Fed meeting where policymakers maintained current interest rates. Central bankers project two quarter-point rate cuts by December, totaling 50 basis points of easing.
Powell may encounter criticism from Trump supporters who favor faster rate reductions. The president has publicly pressed for lower borrowing costs citing declining inflation trends.
The Fed’s latest economic projections showed higher inflation forecasts paired with reduced growth expectations. This combination raises stagflation concerns where economic expansion slows while price pressures persist above target levels.
Seven Fed officials forecast no rate cuts this year while eight predict two reductions. Powell acknowledged these internal divisions should narrow as new data emerges.
Inflation Data Takes Center Stage
Friday’s Personal Consumption Expenditures report for May provides crucial inflation insights. Economists project annual core PCE inflation at 2.6%, up from April’s 2.5% reading.
The core measure excludes volatile food and energy costs and serves as the Fed’s primary inflation benchmark. Monthly core PCE is expected to hold steady at 0.1%.
Bank of America economists noted the reading would be positive for Fed policy but cautioned that tariff uncertainty clouds the inflation outlook. Trump administration trade policies create unpredictable price pressures.
Additional economic releases include manufacturing activity data Monday and consumer confidence surveys Tuesday. Housing market indicators and final first-quarter GDP revisions round out the calendar.
The University of Michigan consumer sentiment survey concludes Friday alongside personal income and spending figures.
Corporate Results Under Scrutiny
Nike headlines corporate earnings Thursday as the athletic wear giant grapples with revenue declines and tariff concerns. The Dow component previously warned about potential trade policy impacts on operations.
Analysts suggest the recent Dick’s Sporting Goods and Foot Locker merger could benefit Nike through improved retail partnerships and distribution channels.
FedEx reports Tuesday results following management warnings about softening demand and profit pressures. Shipping volumes often signal broader economic health and international trade flows.
Micron Technology releases Wednesday earnings after announcing a massive $200 billion domestic semiconductor investment. The memory chip maker’s results will indicate industry demand trends.
Carnival Corporation also reports this week as the cruise industry continues recovering. Additional earnings come from General Mills, Paychex, and Walgreens.
Tesla’s robotaxi service may debut Sunday in Austin, though the company has delayed product launches previously. Any developments could move the electric vehicle stock throughout the week.
Market Dynamics Shift
The Israel-Iran conflict has produced limited equity market reactions so far, but weekend US involvement may change investor sentiment. Research indicates oil prices would need to reach $120 per barrel to threaten economic growth significantly.
DataTrek Research analysis shows crude typically doubles year-over-year before recessions occur. Current levels remain far below that threshold despite recent gains.
The S&P 500 has traded near record highs for weeks without breaking through its February 19 peak of 6,144.15. Historical patterns suggest extended consolidation periods are common after major market declines.
Oil price movements will be critical for equity performance as energy costs filter through the broader economy. Higher fuel expenses could pressure consumer spending and corporate margins.
The combination of geopolitical uncertainty and Federal Reserve policy decisions creates a complex backdrop for markets. Investors must weigh military developments against domestic economic fundamentals as the week unfolds.
