Wall Street Reverses Losses Amid Easing Geopolitics and IPO Surge

Wall Street began last week with a heavy sell-off as investors appeared anxious about the U.S.-Iran war, elevated inflation and fears of a potential tech correction. However, stocks staged a massive turnaround midweek, driven by easing tensions in the Middle East and the largest initial public offering in U.S. financial history. Consumer Staples and Real Estate led the market sectors, while Information Technology and Communication Services lagged. Crude oil prices reached an eight-week low as the potential for a deal to reopen the Strait of Hormuz gained traction. Gold prices declined for a second straight week on improving risk appetite.

Inflation Heats Up in May as Energy Prices Drive Annual CPI Higher

The Consumer Price Index rose 0.5% in May and 4.2% over the last 12 months, marking its highest yearly level since April 2023. Energy prices, which rose 3.9%, accounted for over 60% of the overall May increase. Prices at the pump increased 7.0% in May and 40.5% over the last 12 months. Prices for shelter rose 0.3% in May, while food prices increased 0.2% over the month. Prices less food and energy rose 0.2% in May and 2.9% from a year earlier, which was the highest rate since September 2025.

Eye on the Week Ahead

The Federal Open Market Committee meets this week. With inflation at levels above the Fed’s 2.0% target and solid job gains, it is unlikely that the Committee will lower the federal funds target rate range at this time.