Last week brought a decision by the Fed on its key interest rate and no respite in the Israel-Iran conflict, making it an opportune time to share a quick rundown of what happened and highlight what’s ahead. Here’s a snapshot of what you should know.

Stock Index Performance
The S&P 500 dipped by 0.15%.
The Nasdaq 100 fell by 0.02%.
The Dow Jones Industrial Average was lower by 0.02%.

Federal Reserve & Interest Rates
The Federal Reserve kept its main interest rate steady at a range of 4.25% to 4.5%, though Fed officials still see two quarter-point rate cuts in 2025. Federal Reserve Chair Jerome Powell said that tariffs will likely push inflation higher in the months ahead, citing early signs of price pressures and business plans to pass along higher costs from tariffs.

The Fed lowered its U.S. growth forecast for 2025 from 1.7% to 1.4% and raised its inflation forecast to 3.1% from its 2.8% forecast in March. While the Fed is waiting to see if tariffs do spark those inflationary pressures, it has indicated it will sit tight if the labor market is stable.

Israel-Iran Conflict
The attacks between the two countries ended week one with Iran’s supreme leader, Ayatollah Ali Khamenei, saying that Iran won’t surrender and warning that the U.S. will “undoubtedly be met with irreparable damage” if it enters the conflict.

Brent crude oil closed last week at $77 a barrel, an 11% jump since Israel launched its air campaign against Iran.

Financial markets are on edge with a worst-case scenario: Tehran could cut off ship traffic carrying oil and gas supplies through the Strait of Hormuz, potentially shocking the global economy.

Home Builder Sentiment & Retail Sales
Home builder sentiment reported a reading of 32, the lowest since December 2022, according to the National Association of Home Builders (NAHB). Any reading below 50 is considered contractionary.

Homebuyers have been on hold due to higher mortgage rates, tariffs, and economic uncertainty. Builder confidence helps track the pace of home buying.
Retail sales fell for the second consecutive month, declining by 0.09% in May, below the forecasted 0.06% decline.

The Week Ahead
This week’s attention will likely start with the level of U.S. involvement in the Middle East conflict, with the U.S. launching air strikes on Iranian nuclear facilities over the weekend.
Early Purchasing Managers’ Index (PMI) survey data for the U.S. and eurozone will give insight into global economic trends and business confidence in June. Note that the data collected amid ongoing tariff uncertainty may also be exacerbated by tensions in the Middle East.
Fresh inflation numbers will help guide expectations of monetary policy, as will consumer confidence surveys from both the Conference Board and the University of Michigan. U.S. trade data should also reflect the impact of tariffs.