Alexandra Semenova

Sat, Jun 14, 2025, 5:00 AM6 min read

(Bloomberg) -- For weeks, the S&P 500 Index has inched along near an all-time high despite encouraging economic signals, as Wall Street’s concerns about a rich stock market in the face of mounting global uncertainty kept buying in check.

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On Thursday night, those fears became real, with Israel and Iran exchanging missiles, threatening to start a wider war in the Middle East, which is already near boiling after years of fighting in Gaza. The price of oil spiked as much as 14% on Friday, while the yield on 10-year Treasuries halted a four-day slide and started rising again. The Cboe Volatility Index, or VIX, climbed above 20.

As for stocks, they were relatively subdued until selling pressure hit at the end of the day, sending the S&P 500 down 1.1%. Still, after a week of highs and lows, the index ended the five sessions essentially where it started. And it remains less than 3% away from a record.

“We don’t think you trade to an all-time high in 2025 — it waits until 2026,” said Julian Emanuel, chief equity and quantitative strategist at Evercore ISI. “We think with all the event risk — Israel and Iran, tariffs, the Big Beautiful Bill — that the summer will be a grind until uncertainty diminishes. And it will, eventually, and that will lead to new all-time highs.”

That said, investors don’t really seem to be stressing at the moment. A gauge of projected correlation for the 50 largest S&P 500 constituents in the next three months is hovering near the lowest level since February, when the stock market posted its last record, signaling that equities are expected to move more according to their own tunes than to macroeconomic headlines.

It’s been a weird time for trading stocks. The usual catalysts aren’t working as expected, and moves in either direction are historically muted. The S&P 500 hasn’t risen or fallen more than 0.6% in 11 of the past 13 sessions through Friday, a development not seen since December, according to data compiled by Bloomberg.

‘Sell The News’

A new high on the S&P 500 looked like a cinch this week before fighting in the Middle East escalated Thursday evening. Soft consumer price index and producer price index readings pointed to inflation that’s under control. Treasury auctions were strong. And the US and China de-escalated trade tensions. But the benchmark index barely moved, and actually declined on Wednesday after a CPI print that was as close to ideal as it could be.