June S&P 500 E-Mini futures (ESM25) are trending down -0.46% this morning as the Israel-Iran conflict entered its fifth day, dimming investors’ hopes for a quick de-escalation between the two nations.

Risk sentiment deteriorated after U.S. President Donald Trump called for the evacuation of Tehran, in comments that clashed with earlier optimism that Israel-Iran tensions would not escalate into a broader conflict. As Israel and Iran continued to trade missile strikes, President Trump abruptly ended his G-7 visit but stated that his return to Washington “has nothing to do with” a ceasefire. Trump said in a social media post on Tuesday that he had not contacted Iran for peace talks “in any way, shape or form.”

“The degree of uncertainty is very high. So far, the market hasn’t captured an escalation of the conflict. Now we’re sailing in the fog,” said Laurent Lamagnere, head of development at AlphaValue.

Investors also await the start of the Federal Reserve’s two-day policy meeting and a slew of U.S. economic data, with a particular focus on the retail sales report.

In yesterday’s trading session, Wall Street’s three main equity benchmarks ended in the green. Chip stocks rallied, with Advanced Micro Devices (AMD) surging over +8% to lead gainers in the Nasdaq 100 and ON Semiconductor (ON) climbing more than +5%. Also, Roku (ROKU) gained over +10% after announcing an exclusive partnership with Amazon.com, enabling advertisers to tap into the largest authenticated Connected TV footprint in the U.S. through Amazon DSP. In addition, EchoStar (SATS) soared more than +49% after Bloomberg reported that U.S. President Trump stepped in to help settle the dispute between the FCC and the company regarding its spectrum licenses. On the bearish side, Sarepta Therapeutics (SRPT) cratered over -42% after suspending shipments of Elevidys for infusions in non-ambulatory patients following the death of a second patient from acute liver failure.

Economic data released on Monday showed that the Empire State manufacturing index unexpectedly fell to -16.00 in June, weaker than expectations of -5.90.

The Federal Reserve kicks off its two-day meeting later in the day. The central bank is widely expected to keep the Fed funds rate on hold in a range of 4.25% to 4.50% on Wednesday. Investors will follow Chair Jerome Powell’s post-policy meeting press conference for hints on what could ultimately prompt the central bank to make a move on interest rates and when that might happen. The Fed’s quarterly “dot plot” in its Summary of Economic Projections, which shows FOMC members’ forecasts regarding the path of interest rates, will also be closely watched.

“[Powell] may describe recent inflation developments as encouraging, but also downplay their relevance given uncertainty ahead due to tariffs, fiscal policy, and the recent spike in the oil price due to geopolitical developments,” said David Doyle at Macquarie Group.

On the economic data front, all eyes are focused on U.S. Retail Sales data, which is set to be released in a couple of hours. Economists, on average, forecast that May Retail Sales will stand at -0.5% m/m, compared to the April figure of +0.1% m/m.

Investors will also focus on U.S. Core Retail Sales data, which came in at +0.1% m/m in April. Economists expect the May figure to be +0.2% m/m.

U.S. Industrial Production and Manufacturing Production data will be reported today. Economists expect May Industrial Production to be unchanged m/m and Manufacturing Production to be +0.1% m/m, compared to the April figures of unchanged m/m and -0.4% m/m, respectively.

U.S. Export and Import Price Indexes will be released today as well. Economists anticipate the export price index to be -0.1% m/m and the import price index to be -0.2% m/m in May, compared to the previous figures of +0.1% m/m and +0.1% m/m, respectively.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.427%, down -0.52%.

The Euro Stoxx 50 Index is down -1.05% this morning as concerns over a possible escalation in the Israel-Iran conflict dampened sentiment. Bank and industrial stocks led the declines on Tuesday. Renewable energy stocks also slumped as the U.S. Senate Finance Committee is weighing a complete phase-out of solar and wind tax credits by 2028. The Israel-Iran conflict stretched into a fifth consecutive day on Tuesday, with U.S. President Donald Trump urging the evacuation of Tehran. It wasn’t clear what the U.S. president was referring to, but his remarks rattled markets. Meanwhile, U.K. Prime Minister Keir Starmer reached an agreement with U.S. President Donald Trump on Monday to implement the trade terms outlined last month, cutting U.S. tariffs on major British exports and increasing U.K. quotas for select American agricultural goods. On the economic front, the ZEW Economic Research Institute reported on Tuesday that German investor morale improved more than expected in June, supported by stronger consumer demand and the anticipated lift from the new government’s spending plans. “Confidence is picking up,” ZEW President Achim Wambach said. In corporate news, Amadeus IT Group SA (AMS.E.DX) slid over -3% after Goldman Sachs sold shares of the company.

European Central Bank Governing Council member Yannis Stournaras said late on Monday that the central bank has reached a “first point of equilibrium,” and any additional rate cuts will hinge on incoming data.

Germany’s ZEW Economic Sentiment Index and Eurozone’s ZEW Economic Sentiment Index were released today.

The German June ZEW Economic Sentiment Index came in at 47.5, stronger than expectations of 34.8.

The Eurozone June ZEW Economic Sentiment Index stood at 35.3, stronger than expectations of 23.5.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.04%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.59%. 

China’s Shanghai Composite Index closed just below the flatline today as investors adopted a cautious stance while assessing global trade and geopolitical developments. Technology stocks underperformed on Tuesday. At the same time, energy stocks advanced. Sentiment was dampened by a draft statement from Group of Seven leaders outlining plans to bolster critical mineral supply chains in response to China’s export restrictions. Also, the Financial Times reported on Tuesday that the European Union declined to hold a flagship economic meeting with Beijing ahead of a leaders’ summit next month due to a lack of progress on their trade disputes. Geopolitical risks also escalated after U.S. President Donald Trump called for the evacuation of Tehran in a social-media post and abruptly left the Group of Seven leaders’ summit in Canada, fueling speculation that Israel may initiate a new round of attacks on Iran. Meanwhile, investors are awaiting further policy signals from Beijing after the latest mixed batch of data added to the uncertainty surrounding the economic outlook for the rest of the year. Shanghai will kick off its annual two-day Lujiazui Financial Forum on Wednesday, during which top financial officials said they would announce new policies to boost economic growth and advance reforms in the financial industry. In corporate news, Chow Tai Fook Jewellery Group plunged over -7% in Hong Kong after announcing a plan to raise $1 billion in one of the largest convertible bond sales in the city this year.

Japan’s Nikkei 225 Stock Index closed higher and hit a 4-month high today, tracking overnight gains on Wall Street. Chip-related stocks led the gains on Tuesday as momentum continued to build for AI trades. Investors appeared to shrug off the growing tensions in the Middle East, with U.S. President Donald Trump calling for the evacuation of Tehran. The benchmark index maintained its earlier gains after the Bank of Japan left its policy rate unchanged amid ongoing trade uncertainty. The BOJ held its policy rate steady at 0.5% at the end of a two-day meeting on Tuesday, where it has remained since its last hike in January. In a widely expected move, the central bank said it would slow the pace of its monthly bond purchase cuts starting next fiscal year to quarterly reductions of 200 billion yen from the current 400 billion yen. The decision comes after recent sharp movements in Japanese government bonds that rippled across global debt markets. Meanwhile, the timing of the BOJ’s next rate hike remains uncertain as Japan still seeks to finalize a trade deal with the U.S. to avoid tariffs. Higher tariffs could dampen exporters’ profits and slow wage growth momentum, potentially postponing the timing of the next hike. Governor Kazuo Ueda said, “It’s not appropriate for me to comment on the likelihood of a rate hike in the near future, but I’d like to see how hard data pan out.” Japanese Prime Minister Shigeru Ishiba and U.S. President Donald Trump agreed to advance trade talks on Monday, but failed to achieve a breakthrough that would reduce or remove tariffs threatening to hinder the Japanese economy. “There are still points where our understandings don’t align,” Ishiba said. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -2.26% to 24.64.

Pre-Market U.S. Stock Movers

Solar stocks plunged in pre-market trading after Senate Republicans outlined revisions to President Trump’s tax-and-spending bill that would phase out solar, wind, and energy tax credits by 2028. Sunrun (RUN) is down over -27%, Enphase Energy (ENPH) is down more than -16%, and First Solar (FSLR) is down over -10%.

Energy stocks and energy service providers are moving higher in pre-market trading, with the price of WTI crude up about +2%. Exxon Mobil (XOM), Devon Energy (DVN), Occidental Petroleum (OXY), and Schlumberger (SLB) are up about +1%.

Roku (ROKU) gained more than +2% in pre-market trading after Loop Capital upgraded the stock to Buy from Hold with a price target of $100.

Lennar (LEN) rose over +2% in pre-market trading after the homebuilder posted better-than-expected FQ2 revenue.

Verve Therapeutics (VERV) jumped about +80% in pre-market trading after the Financial Times reported that Eli Lilly was in advanced talks to buy the company for up to $1.3 billion.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - June 17th

Jabil Circuit (JBL), John Wiley & Sons (WLY), La-Z-Boy (LZB), Tsakos Energy (TEN), Kirklands (KIRK).