Stock Market Navigates Inflation and Trade Tensions in June 2025

Person looks at stormy financial horizon

The stock market experienced a volatile June 2025, grappling with new inflation data and evolving trade policies. Investors closely watched the Consumer Price Index (CPI) and Producer Price Index (PPI) for signs of tariff-induced inflation, while ongoing trade negotiations and corporate earnings reports added to market uncertainty. Despite some positive indicators, concerns about economic slowdowns and market valuations persisted.

Inflation Concerns and Tariff Impacts

June 2025 saw heightened anticipation around inflation data, particularly the May CPI and PPI readings. Economists, including Bernard Yaros of Oxford Economics, expected these figures to reflect the impact of higher tariffs imposed by the Trump administration. While the overall CPI was projected to hold steady at 0.2% monthly, core CPI (excluding volatile food and energy) was anticipated to rise to 0.3% monthly and 2.9% year-over-year, up from 2.8%.

  • Expected Tariff Impact: May and subsequent months were seen as the period when tariff effects on goods prices would become evident, potentially eroding consumer spending power.
  • Market Reaction: Despite these concerns, market watchers generally believed the stock market could absorb a one-time pricing adjustment. However, a sustained inflationary trend would signal a looming economic slowdown.
  • Goldman Sachs Outlook: Goldman Sachs revised its 12-month recession probability down to 30% from 35%, citing a smaller-than-expected drag from tariffs and a return to pre-tariff financial conditions.

Trade Policy and Market Volatility

Trade tensions, particularly between the U.S. and China, significantly influenced market sentiment. While a 90-day pause on reciprocal tariffs was announced, the long-term implications remained a key concern.

  • De-escalation Efforts: Treasury Secretary Scott Bessent indicated a willingness to extend the tariff pause for countries negotiating in good faith, suggesting a potential softening of trade policy.
  • Market Impact: Despite de-escalation efforts, BCA Research suggested that stocks were unlikely to reach new highs, as the market was already priced for perfection. Volatility tied to trade uncertainty was seen by Wells Fargo as a potential opportunity for equity exposure.
  • Corporate Concerns: Companies like Honda Motor anticipated significant profit hits due to tariff uncertainty, leading to a projected 70% slump in net profit for the fiscal year ending March 2026. Apple was also projected to face a disappointing holiday season due to consumer belt-tightening in response to economic uncertainty.

Key Market Movements and Earnings

Amidst the broader economic narrative, specific sectors and companies experienced notable movements.

  • Technology Sector: Nvidia and Oracle showed strength. Nvidia returned to the $3 trillion club after a major deal with Saudi Arabian AI startup Humain. Oracle’s shares surged following better-than-expected earnings and a bullish outlook, with cloud infrastructure revenue expected to increase over 70% in fiscal year 2026.
  • Financial Sector: Wells Fargo, Citigroup, and Goldman Sachs reported stronger-than-expected profits, contributing to a positive market day.
  • Other Notable Movers:
    • Boeing: Shares fell after a Dreamliner crash in India, raising concerns about its safety record.
    • Novo Nordisk: Shares popped on hopes for a next-generation obesity drug, amycretin.
    • Chime Financial: Opened at $43 after pricing its IPO at $27, valuing the company at $11.6 billion, lower than its 2021 valuation.

Key Takeaways

  • Inflation data, particularly core CPI, was closely watched for signs of tariff impact.
  • Trade policy, while showing signs of de-escalation, continued to be a significant factor influencing market sentiment and corporate outlooks.
  • Technology and financial sectors demonstrated resilience, with strong earnings from key players like Oracle and major banks.
  • Broader market volatility and concerns about economic slowdowns remained, despite some positive indicators.

Sources