The final full trading week in June was another consequential one as several key events took place. On Thursday, the Core PCE Price Index and final estimate for the first quarter gross domestic product (GDP) were released. More tensions between the United States and Iran had an influence on both oil and gold prices.
The Core PCE Price Index came in at 0.3 percent, which was in line with analyst expectations. According to the IMF, this result provides validation that the Fed was right to remain steady on interest rates. The IMF also said that the United States is in position to bring inflation back to the Fed’s 2 percent target by the end of 2027.
During the first quarter of 2026, it’s now believed that the economy grew by 2.1 percent as opposed to 1.6 percent as first reported. This is another reason why interest rates are unlikely to change soon as growth tends to counteract increases in prices. There are some who believe that the Fed will be hesitant to raise rates before the midterm elections to avoid any implication that politics were involved in the decision.
Although a memorandum of understanding (MOU) was signed by Iran and the United States, there are still bursts of hostilities between the two sides. Late this week, Iran targeted a ship in the Strait of Hormuz with a drone despite its obligation under the MOU to allow unfettered access to the waterway.
Gold prices rebounded from a low of around $3,950 an ounce on Wednesday afternoon to close the week at $4,087. The price of gold has fallen significantly in recent weeks in large part because of easing tension in the Middle East. Often, gold is a hedge against geopolitical tensions and their impact on fiat currencies.
Oil also took a nosedive this week with West Texas Intermediate (WTI) falling to a low of $73.81 per barrel. The price of WTI began the month of June at just under $100 per barrel as a projected increase in production and supply of oil reduces demand and the price people are willing to pay. Of course, it’s unlikely that drivers will see any immediate relief at the gas pump.
The S&P 500 dropped 2 percent this week to close at 7,354 at the end of trading Friday. This is a drop of 151 points over the course of the last five trading days. For the week, the index made a high of 7,527 at the open on Monday and a low of 7,318 on Friday.
The Dow was up by 0.12 percent this week to close at 51,876 at the end of the day on Friday. On Tuesday, the market made its low of the week at 51,403 before reversing and making a high of 52,610 on Thursday.
The Nasdaq was down 4.34 percent this week to close at 25,292. The index experienced outsized losses compared to the other two major indexes because of concerns about chip production and the future of AI. This week, the market made a high of 26,503 on Monday and a low of 25,327 on Thursday.
In international news, Canada announced on Monday that inflation was up 1 percent in May. It also announced that inflation was up 2 percent on an annualized basis. On Tuesday, Australia announced that inflation had gone down by 0.7 percent compared to an expected decrease of 0.4 percent. This translates to an inflation rate of 4 percent on an annualized basis for the nation. On Thursday, Japan announced its inflation rate was 1.6 percent on a yearly basis.
The upcoming week will likely be another interesting one as the jobs report for June is expected to be released on Thursday. The JOLTS report will also come out next week while Fed Chair Warsh is expected to give testimony before the July 4 holiday. The market will be closed on Friday in observance of Independence Day.