Tuesday, June 17, 2025
Market indexes finished today near session lows, after fighting their way back toward break-even by late morning. President Trump, fresh from exiting the G7 summit in Banff yesterday, has seemed to amplify rhetoric about a potential U.S. strike on targets in Iran, which would expand the conflict from one concerning Israel and Iran alone.
As a result, energy was the only sector to finish the trading day in positive territory, up +4% on WTI to the highest levels of oil prices since mid-January: $74.89 per barrel, +3% on Brent crude to $72 per barrel. Solar companies took it on the chin today, as the Big Beautiful Bill passing through Congress has removed all assistance to domestic solar power initiatives.
The Dow closed down -299 points today, -0.70%, and it was the best of the bunch. The S&P 500 found itself back below 6K again today, -50 points or -0.84%. The Nasdaq slipped -0.91%, as all Mag 7 stocks closed lower today, and the small-cap Russell 2000 took up the rear today, -0.97%.
Manufacturing Data Comes in Light for May
Minutes before this morning’s opening bell, we got monthly manufacturing data by way of Industrial Production and Capacity Utilization, both for May. The headline on
Industrial Production reached -0.2%, below the -0.1% expected and the upwardly revised +0.1% from the previous month. Year over year, this print dwindled to +0.6%, less than half the prior month’s read of +1.4%.
Capacity Utilization, monitoring whether manufacturing is up near its full potential, struck the lowest level since November of last year: 77.4%. This was the third-straight monthly drop, from February’s 12-month high 78.2%. April’s unrevised 77.7% was where this month’s consensus estimate was at. Current capacity utilization is -2.2% below the long-run average (from between 1972 and 2024).
These are mildly disappointing numbers, demonstrating that our still-murky tariff policy has not yet firmed domestic manufacturing data, at least according to these metrics. But we’d consider ourselves still range-bound at current levels; though slightly off expectations, we do not see these data points falling off a table.
Business Inventories, Homebuilder Confidence Mixed
April
Business Inventories came in as expected at “unched” (0.0%), below the +0.1% from the prior month and also the third-straight lower monthly print. It’s also the third time in the past 12 months we’ve seen a 0% read on inventories, but keep in mind: these are April figures, with the report coming from within the same general time period as the initial “Liberation Day” tariffs. We’ll get a better picture on these levels when we see the post-tariff months report.
Homebuilder Confidence for June also came out this morning after the normal trading day began. Its headline was a disappointing 32, the lowest level we’ve seen since December of 2022, below the 35 anticipated and 34 reported the previous month. Over the past two years, as mortgage rates have climbed and remained at multi-year highs, we’ve seen this survey reach lower highs and lower lows. Once the Fed starts lowering rates again, perhaps we’ll see a change here.
What to Expect from the Stock Market Tomorrow
Continuing with housing data, ahead of Wednesday’s open we’ll see
Housing Starts and Building Permits for May. No major changes are expected on either metric: Housing Starts are expected to tick down to 1.35 million seasonally adjusted, annualized units from 1.36 million in April. Permits look to tick up to 1.42 million from 1.41 million the prior month. Both are at historically cool levels, again owing to high mortgage rates keeping housing relatively stagnant.
Also, with Thursday of this week a market holiday in observance of Juneteenth,
Weekly Jobless Claims will be out a day early. Initial Jobless Claims are anticipated to come down slightly from the multi-month high 248K reported last week to around 246K. Continuing Claims last week shot up to their highest level since November of 2021 to 1.96 million. We may expect a downward revision here, as we’ve seen in weeks past. That said, we’re on a three-week streak with longer-term claims above 1.9 million.
Finally, the
June Fed meeting will be its fourth in a row without making a move on interest rates. There is a near-100% certainty the Federal Open Market Committee (FOMC) will keep the 4.25-4.50% range we’ve seen since December. We’ll also check the Fed statement accompanying the policy announcement and Fed Chair Jerome Powell’s press conference following for any change in outlook from previous concerns.
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