Unpredictable, New Highs, Indecisive Consumers, and Arugula is No More

June 29, 2025

THE STOCK MARKET IS UNPREDICTABLE: On Monday morning, I was in an internal investment committee meeting. One of the CFAs (Chartered Financial Analyst) asked me, "If I told you a week ago that on this coming weekend the U.S. would bomb Iran, what would you tell me the stock market would be doing when it opened on Monday?" Of course, the answer to this hypothetical question was that the market would be declining, probably by a lot. As we were in the meeting, the market was rising. The S&P 500 was up by nearly one percent on Monday. It has certainly been helpful to the markets, and to overall sentiment, that the bombing ended abruptly and that China and Russia stayed on the sidelines.

NEW HIGHS: When the S&P 500 declines after hitting a new high, it usually takes a long time to regain that former high point. Not this time. After the S&P 500 dripped in April due to the tariff-inspired selloff, it took only 89 days to recover and hit a new high this past week. That is the fastest ever recovery from a decline of at least 15%. This week, investors shook off concerns about the Middle East, especially when the fragile Iran/Israel cease fire agreement was announced. Oil prices went lower and optimism about the potential for less conflict in the Middle East spurred buying. Thereafter, continued trade negotiations between the U.S. and China and the European Union lifted markets even further. On Friday, markets were rising again and then sank when word got out that the U.S. and Canada's trade talks had stalled, but later in the day markets recovered and continued the rally.

LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.

PCE INFLATION RISES: The Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) Index rose 0.1% last month. The annual number increased from 2.1% to 2.3%. The core CPE (excludes energy and food) annual rate moved up from 2.5% to 2.6%.

PERSONAL INCOME: Overall personal income decreased by 0.4% last month. However, some one-time government transfers (a one-time Social Security program for public sector workers not typically covered by Social Security and a one time Emergency Commodity Assistant Program to certain farmers) ceased last month, causing the overall decline in the income number. Private sector wages and salaries actually rose by 0.4% last month.

ORDERS FOR DURABLE GOODS INCREASE: New orders for durable goods rose by a whopping 16.4% last month, the fastest pace in over a decade. However, the rise was almost all caused by orders for commercial aircraft. Qatar Airways made a massive order with Boeing after President Trump's tour through Saudi Arabia, Qatar and the United Arab Emirates. Even without aircraft orders, durable goods orders were still up 0.5% last month, a healthy number.

CONSUMERS FEELING A LITTLE BETTER THIS MONTH: According to the University of Michigan's index of consumer sentiment, consumers are feeling a little better than the prior month. The index reading in May was 52.2. For the June reading, it was back up to 60.7. That is still low compared to recent history. Before the COVID lockdowns, the index routinely came in above 100. Since those lockdowns and the succeeding inflation, consumer sentiment has stayed in a lower range. After a bit of a rise from June of last year (when it hit a low of 50), it rose steadily until early this year when it hit 80 and then dropped after the initial tariff announcements.

...OR ARE THEY?: Another well-known consumer survey is conducted by the Conference Board. According to its survey, consumer confidence fell in June as its index decreased from 98.4 to 93. According to the Conference Board, consumers remained nervous about tariffs even after steps to de-escalate the trade war.

THE TEAM: With a new person added to our team recently, we had to get a new group shot for the website. Here we are!

AI AND DEFLATION?: OpenAI's CEO Sam Altman told attendees at a recent Morgan Stanley event that artificial intelligence will likely have a deflationary impact on the global economy. Because it will drive global efficiency, AI will help offset inflation, according to Altman.

GOODBYE ARUGULA: When the governments started closing and then restricting activities, we decided that when we went back to restaurants we would support the small ones that were close by that we really liked. We specifically made sure we went to two local restaurants, one being a very small Italian restaurant a couple of miles from our house called Arugula. The owner and the person you talk to for reserving a table, is a lovable grumpy man with a heavy Italian accent. The food is awesome, as are the servers. A couple of weeks ago, we learned that they were shutting it down, so this weekend, we made sure to go one last time.

FUN AT THE BEACH: The whole family spent some time at the beach last weekend. Having all six grandkids in one place: priceless. Getting them to pose for a picture: difficult.

Have a great week!

Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.

Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545

dmacgray@stonecropadvisors.com

"You don't know what kind of day you will have, until evening." Sophocles

"Who of you by worrying can add a single hour to his life?" Luke 12:25 (NIV)

SOURCES:

THE STOCK MARKET IS UNPREDICTABLE: YCharts.com

CONSUMERS FEELING A LITTLE BETTER THIS MONTH: https://www.wsj.com/economy/consumer-sentiment-june-2025-d597afe9?mod=economy_lead_pos3

AI AND DEFLATION?: https://finance.yahoo.com/news/sam-altman-warns-ai-deflationary-183017350.html?guccounter=1&guce_referrer=aHR0cHM6Ly9kdWNrZHVja2dvLmNvbS8&guce_referrer_sig=AQAAAL2Xe4hFBOCCl-sXnoHdZ9AOD-gXtyLBPzI5ef5uD_h8Spqhi4_JITxjf6FoTj-VzVJmOjpnJJtr0KShnomtokJB_VJrOKNbExJQ5lAutJdUZIfxyTHVLd4rGEZWi5WSNNpfv0gx9X8Ir5LafW3WCUTw4ICFRwR_NpSDBGGCoPe-

...OR ARE THEY?: https://www.wsj.com/economy/consumers/survey-shows-u-s-consumer-confidence-worsened-in-june-750bf7df?mod=economy_feat4_consumers_pos1

PCE INFLATION RISES: https://www.bea.gov/news/2025/personal-income-and-outlays-may-2025

PERSONAL INCOME: https://www.ftportfolios.com/retail/blogs/economics/index.aspx

ORDERS FOR DURABLE GOODS INCREASE: https://www.ftportfolios.com/Commentary/EconomicResearch/2025/6/26/new-orders-for-durable-goods-surged-16.4percent-in-may

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Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.

SDG

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.