After a muted few days for the market, investors in the week ahead will grapple with the fallout of the United States’ decision to enter Israel’s war with Iran. Here’s a closer look at the five big things we’re watching in the market in the week ahead. 1. Geopolitics: President Donald Trump said Saturday night that the U.S. attacked Iranian nuclear sites , including the Fordo facility built into the side of a mountain. Iran’s foreign minister called America’s strikes “outrageous,” and said the country reserves all options to defend itself. Investors had spent much of last week trying to gauge whether Trump would bring the U.S. military directly involved in the Israel-Iran conflict. Through Friday’s market close, the impact on stocks had been largely muted, as investors bet the back-and-forth strikes between the longtime regional foes would not spillover into a broader conflagration that meaningfully dents economic growth — as analysts at Deutsche Bank pointed out , that has historically been what it takes for geopolitics to really matter to the market long-term. In the wake of direct U.S. military involvement, one of the big questions for investors is what happens to the price of oil. Iran’s response to the American bombings could influence that. Any developments that meaningfully disrupt oil supply, including the vital Strait of Hormuz shipping route, could lead to further price spikes. In any case, the commodity figures to remain a crucial barometer for how traders are evaluating the Middle East situation, and even absent supply disruptions, the market could price in a higher “risk premium,” putting upward pressure on prices. 2. Inflation data: The Fed’s preferred inflation gauge — the personal consumption expenditures price (PCE) index — is set to be released Friday morning, offering the latest look at how Trump’s tariffs are rippling through the U.S. economy. A different measure of inflation, the consumer price index (CPI), rose a less-than-expected 0.1% month over month in May, the Bureau of Labor Statistics reported June 11 . That put the annual inflation rate, as measured by the CPI, at 2.4%. The Fed puts greater focus on the PCE index because it believes the metric does a better job of capturing actual consumer spending patterns, particularly in response to price changes. The Fed has a dual mandate of maintaining price stability and maximum employment. While Trump’s tariffs have yet to show a major impact on official inflation statistics, the Fed has adopted a patient stance and kept interest rates steady at its policy meeting last week , just as it did in early May . The central bank argues the full effect of tariffs hasn’t yet been felt and the labor market has remained resilient enough to wait for more data. “It takes some time for tariffs to work their way through the chain of distribution to the end consumer. A good example of that would be goods being sold at retailers today may have been imported several months ago before tariffs were imposed. So we’re beginning to see some effects, and we do expect to see more of them over the coming months,” Fed Chair Jerome Powell said at the Fed’s meeting Wednesday. Nevertheless, members of the Fed’s policymaking arm still expect the central bank to cut interest rates twice this year, according to projections released Wednesday. That’s unchanged from their outlook in March. Powell stresses that the Fed will be “data dependent” in making policy, and the PCE index — both Friday’s release and future ones in the coming months — are the kind of data inputs that may sway their thinking. On Friday, Fed Governor Christopher Waller said the central bank could cut rates as early as July , though it’s unclear how widely held his view is among monetary policymakers. 3. Housing: There’s a slew of housing data out this week, starting Monday morning with existing home sales, followed by the Federal Housing Finance Agency’s Home Price Index on Tuesday and new home sales on Wednesday. KB Home also will report earnings on Monday night. Those releases come on the heels of last week’s May housing starts data, which dropped 9.8% to a seasonally adjusted annual rate of 1.256 million, the lowest since May 2020 in the early days of the Covid-19 pandemic. Lennar’s earnings report last week also showed subdued activity , with the homebuilder leaning on incentives to gin up demand. The housing market is always important to follow because it’s an important part of the U.S. economy — in fact, Jim Cramer argues it punches above its weight because a lot of related purchases get made when someone moves, such as buying a new TV and furniture to fit the new space. And yet, housing has seemingly become an even bigger focus lately, given there’s concern about a slowing…
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