The University of Michigan’s preliminary Consumer Sentiment Index for June, released at 10:00 AM ET, provided a mixed picture.
US stocks continued their downward trajectory into late morning trading on Friday, as heightened geopolitical risks in the Middle East and mixed economic signals kept investors on edge. The Dow Jones Industrial Average fell 612 points, or 1.4%, to 42,253.77. The S&P 500 dropped 0.9% to 5,959.88, while the Nasdaq Composite declined 1.1% to 19,400.12, erasing earlier weekly gains and reflecting a broader shift away from risk assets.
The market’s decline was driven by ongoing fallout from Israel’s airstrikes on Iran, which targeted nuclear and military infrastructure overnight. Iran vowed retaliation, with state media reporting significant casualties, including top military commanders. The escalation pushed oil prices higher, with Brent crude futures holding at $75.54 a barrel (up 8.5%) and West Texas Intermediate (WTI) at $73.52 (up 8%). Energy stocks remained a bright spot, with ExxonMobil gaining 2.9% and Occidental Petroleum rising 3.5%, as investors anticipated potential supply disruptions through the Strait of Hormuz.
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Defense stocks also rallied, with Northrop Grumman and L3Harris Technologies each up over 4%, reflecting expectations of increased military spending. However, the broader market saw a flight to safety, with gold prices rising 1.5% to $3,434 per ounce—nearing a record high—and the US 10-year Treasury yield dipping slightly to 4.35% as investors sought safer assets. The U.S. dollar index strengthened by 0.3%, adding pressure on riskier assets like equities.
Social media sentiment on X underscored the market’s unease, with users highlighting the risk of further escalation. One market watcher noted, “Oil’s spike and gold’s rally signal a classic risk-off move—equities could face more pain if Iran retaliates over the weekend.” Another user pointed out, “Defense stocks are soaring, but the broader market isn’t buying the stability narrative—volatility is here to stay.”
The University of Michigan’s preliminary Consumer Sentiment Index for June, released at 10 am Eastern Time, provided a mixed picture. The index rose to 60.5, beating expectations of 54.0 and improving from May’s 52.2, marking a 15.9% month-over-month increase—the largest in over a year. The uptick suggests that U.S. consumers are more optimistic about the economy, likely due to steady job growth and recent inflation data showing a May CPI of 2.4%. However, the report also highlighted growing concerns about rising energy costs, with many respondents citing geopolitical tensions as a key worry.
Liz Ann Sonders, chief investment strategist at Charles Schwab, commented on the data: “The consumer sentiment jump is encouraging, but the underlying anxiety about oil prices and potential inflation could undermine confidence if tensions in the Middle East persist.” This duality has left investors uncertain, as a stronger consumer base could support retail and discretionary stocks, but inflationary pressures might prompt a more hawkish Federal Reserve stance, potentially tightening monetary policy sooner than expected.
Sector performance showed stark contrasts. Beyond energy and defense, utilities gained 1.2% as investors sought defensive plays, with NextEra Energy up 2.1%. However, technology stocks lagged, with the “Magnificent Seven” group—Nvidia, Apple, Microsoft, and others—down an average of 1.8%. Nvidia, which had led the market’s recovery from April lows, fell 2.3%, reflecting a broader pullback in growth stocks amid the risk-off environment. Payments stocks also struggled, with Visa and Mastercard each down over 4% after reports that Walmart and Amazon are exploring their own stablecoins, potentially disrupting the traditional payments sector.
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On the corporate front, Adobe shares rose 3.2% in late morning trading after the company reported better-than-expected fiscal second-quarter results and raised its outlook, driven by strength in its cloud segment. Conversely, Oracle, which soared 13% on Thursday after strong earnings, pulled back 1.5% as investors took profits. Advanced Micro Devices (AMD) gained 2.8% following the unveiling of its latest AI chips, offering a rare bright spot in the tech sector.
The broader economic context remains fragile. Earlier in 2025, Trump’s tariff policies triggered a 20% drop in the S&P 500 in April, though the index had since recovered on hopes of tariff relief. The current geopolitical crisis threatens to reignite inflationary pressures, with rising oil prices potentially pushing the Fed to delay rate cuts. Federal Reserve Governor Adriana Kugler recently highlighted three inflation risks from tariffs—rising expectations, opportunistic pricing, and reduced productivity—which could be exacerbated by an oil shock. James Rossiter of TD Securities noted, “An oil-price shock is inflationary, and markets may expect an even more hawkish Fed, especially with consumer sentiment showing inflation fears.”
Bitcoin, often seen as a risk asset, fell 2.6% to $106,000, down from its May peak of $111,986, as investors rotated out of cryptocurrencies amid the equity sell-off. Posts on X reflected a bearish mood in the crypto space, with one user stating, “BTC’s drop shows the market isn’t ready for a full-on geopolitical crisis—safe-havens like gold are the play right now.”
Critical Perspective: Beyond the Immediate Sell-Off
While the market’s reaction to the Israel-Iran conflict and consumer sentiment data dominates headlines, deeper structural issues are at play. The S&P 500’s 0.9% decline today masks a broader fragility—tech stocks, which have driven much of the 2025 recovery, are showing signs of exhaustion. The information technology sector, down 1.7% year-to-date as of May, faces headwinds from slowing capital expenditures by hyperscalers like Amazon and Microsoft, who are reevaluating AI infrastructure investments. Terry Sandven of U.S. Bank warned in May, “Slowing capex trends may portend a prolonged period of weakness for the sector until returns on investment are clearer.”