The Markets – June 17, 2025

Investors had a lot to think about last week.

A wealth of positive company and economic news lifted markets for much of last week. However, markets stumbled on news that Israel had launched an attack against Iran. Here’s what happened:

U.S. – China negotiations were positive. U.S. stock markets welcomed news that the world’s two largest economies had successfully established a framework for ongoing discussions. Daniel Flatley and Annmarie Hordern of Bloomberg reported:

“The U.S. and China capped two days of high-stakes trade talks with a plan to revive the flow of sensitive goods — a framework now awaiting the blessing of Donald Trump and Xi Jinping…the Chinese had pledged to speed up shipments of rare earth metals critical to U.S. auto and defense firms, while Washington would ease some of its own export controls…”

Demand for U.S. Treasuries was solid. The U.S. government issues Treasury bills, notes and bonds to fund government spending. Lately, there have been concerns about whether demand for Treasuries would fall due to buyers’ concerns about tariffs or deficits or both. Low demand could mean higher yields on Treasuries – and higher interest costs for the United States, reported Karishma Vanjani of Barron’s.

Last week, there was strong demand for Treasuries. “A closely watched auction of 30-year Treasuries saw stronger-than-expected demand on Thursday, easing for now worries that investors would shun the U.S. government’s longest maturity,” reported Michael Mackenzie of Bloomberg.

Inflation remained relatively low. The U.S. Consumer Price Index (CPI), which measures inflation, showed headline inflation was up 2.4 percent year over year in May. When volatile food and energy prices were excluded, prices rose 2.8 percent year over year. The cost of energy declined in May, and the price of gasoline dropped 12 percent.

“The May CPI came in cooler than expected. While tariff impacts could send inflation higher in the months ahead, the fact that prices held steady so far was an encouraging sign. Odds of a September interest-rate cut ticked higher, and bonds rallied on the news. That has led to rallies in riskier and rate-sensitive stocks,” reported Connor Smith of Barron’s.

Israel launched an attack on Iran. Stock markets moved lower on Friday after Israel launched an airstrike that targeted Iranian nuclear facilities and military leaders, and Iran responded.

“A full-scale war between Iran and Israel has long represented one of many geopolitical planners’ worst-case scenarios. A conflict that damaged global oil supply or shipping would quickly reverberate in the U.S. and across the world by quickly raising oil prices and sending investors selling stocks for safe-haven assets,” according to Matt Peterson of Barron’s.

By the end of the week, major U.S. stock indexes had moved lower. Yields on longer maturities of U.S. Treasuries also moved lower over the week.

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

DO YOU KNOW WHEN YOU’RE USING ARTIFICIAL INTELLIGENCE? Artificial intelligence (AI) is becoming a part of everyday life for many people in the United States, but we don’t always recognize it when we interact with it.

A recent Gallup poll asked Americans whether they had used any type of AI-enabled product over the last seven days.

• 36 percent said they had.
• 50 percent of those surveyed said they had not.
• 14 percent weren’t sure whether they had or not.

It’s not always clear when we’re using a product that uses AI. Consider the following list. Which of these do you think relies on AI?

• Wearable fitness trackers that evaluate sleep and exercise patterns
• A chatbot that answers your questions immediately
• Product recommendations that are based on previous purchases
• Security cameras that send alerts when a stranger is at the door
• Email services that remove spam before it gets to your inbox
• Music playlist recommendations from a digital music provider

When Pew Research surveyed more than 11,000 Americans, asking about “common ways they might encounter [AI] in daily life”, these were the examples they gave.

They found that wealthier individuals (52 percent of upper income participants) and those with more education (53 percent of postgrad and 46 percent of college grad participants) were most likely to recognize that all of these examples rely on AI. In addition, younger Americans were more aware of when they interacted with AI than older Americans were. Overall, less than one-third (30 percent) of those surveyed answered the question correctly.

The fact is that most people use AI and interact with it more frequently than they may realize.

“… when asked about their usage of six common AI-enabled products (personal virtual assistants, navigation apps, weather forecasting apps or websites, social media platforms, streaming services, or online shopping apps or websites), 99 [percent] of U.S. adults report using at least one of these in the past week, with 83 [percent] saying they have used at least four,” reported Ellyn Maese of Gallup.

Most Americans interact with AI at least once a week, and probably far more often.

Weekly Focus – Think About It

“AI is the new electricity.”

– Andrew Ng, AI pioneer

Warm regards,

Daniel J. Murphy, CFP®
Murphy Wealth Management Group
60 Merritt Blvd., Suite 106
Fishkill, NY 12524

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please call with their information so that we can get their permission.
Securities offered through LPL Financial
Member FINRA/SIPC
Investment Advice offered through Murphy Wealth Management Group, INC, a Registered Investment Advisor and separate entity from LPL Financial.