Market Shock: SPY & QQQ Plunge as Israel-Iran Tensions Spike and Retail Sales Disappoint

Geopolitical fire meets economic ice as markets reel from dual shocks.

Middle East escalation meets weak consumer spending—a perfect storm for risk assets.

Traders dump equities as safe havens rally, proving once again that Wall Street''s ''buy the dip'' mantra works until it doesn''t.

Confident Investing Starts Here:

• Easily unpack a company''s performance with TipRanks'' new KPI Data for smart investment decisions
• Receive undervalued, market resilient stocks right to your inbox with TipRanks'' Smart Value Newsletter

The SPX and NDX opened the trading session lower after May’s retail sales data showed a 0.9% month-over-month (MoM) fall, lower than the estimate for a 0.6% drop. Core retail sales, which exclude volatile items like gas, cars, and building materials, rose by 0.4% MoM, ahead of the estimate for a 0.3% rise.

The lower opening comes despite the U.S. and UK finalizing their trade deal reached last month. Under the deal, tariffs on the first 100,000 UK vehicles imported to the U.S. will be set at 10%, down from 27.5%, while the U.S. baseline tariff on imported UK goods will remain in place. In the meantime, both sides will continue to negotiate steel, aluminum, and pharmaceutical tariffs. The market’s muted reaction to the signed deal is likely due to the fact that it contained no new material developments compared to the initial deal.

Meanwhile, sentiment among single-family homebuilders is on the decline. June’s Housing Market Index (HMI) tallied in at 32, the lowest reading since December 2022 and below the estimate for 36. A reading above 50 signals that most surveyed homebuilders feel confident about the current and near-term housing landscape.

The main market catalyst in the short-term remains the Israel-Iran conflict. In a Truth Social post, Trump demanded “UNCONDITIONAL SURRENDER” from Iran and said that the U.S. knows where Supreme Leader Ayatollah Ali Khamenei is hiding but will refrain from targeting him.

The S&P 500 closed with a 0.84% loss while the Nasdaq 100 fell by 1.00%.