Geopolitics has forced the American market to retreat again

The main American stock indexes declined today, having failed to develop the growth of the previous session, as geopolitical risks came to the fore again. The day began with a cautious mood after the news that President Trump left the G-7 summit ahead of schedule to return to Washington and to deal with the escalating conflict between Israel and Iran.

In Truth Social, the president urged everyone to leave Tehran urgently, which set the tone for a weak opening, especially since data on retail sales and industrial production in May turned out to be worse than expected. The selling pressure intensified in the afternoon after the president’s new posts on Truth Social, where he stated that the United States knows the location of Iran’s Supreme Leader, he is an “easy target”, but “for now” the United States will not physically eliminate him, adding that “our patience is wearing thin”.

These words caused a wave of declines in risky assets, the S&P 500 index dropped below 6,000 again, while demand for defensive assets increased: the yield on 2-year Treasury bonds fell by two basis points to 3.95%, and the yield on 10-year Treasury bonds fell by seven basis points to 4.39%.

The US dollar index strengthened by 0.8% to 98.76. All sectors of the S&P 500 closed in the red, with the exception of energy (+1.0%), which broke away from the rest following the rise in WTI oil prices (73,27, +1,44, +2,0%), sharply changed direction after yesterday’s decline.

The healthcare sector looked the worst (-1.6%) amid reports of a possible tightening of disclosure rules and advertising activities of pharmaceutical companies, as well as due to the initiative of the Senate Finance Committee to cut Medicaid costs more than proposed by the House of Representatives.

Shares of Eli Lilly (LLY 791.27, -16.31, -2.02%) were also under pressure due to the announcement of the purchase of Verve Therapeutics (VERV 11.38, +5.11, +81.50%) for $1.0–1.3 billion with cash payment.

The durable goods sector (-1.6%) also lagged behind: many of its companies declined after the publication of retail sales data, while developers fell amid disappointing Lennar results (LEN 104.61, -4.88, -4.46%) and a weak NAHB housing market sentiment index for June (32 versus the forecast of 36 and the value of 34 in May).

Statistics on the breadth of the market also reflected the risk reduction mindset: the number of falling securities exceeded the growing ones by more than 2 times on both the NYSE and Nasdaq. The CBOE VIX volatility index rose by 12.7% to 21.54.

Our American FTinvest 11 portfolio started the day with positive dynamics today, adding about 0.5% and rising above 790. However, it was not possible to maintain the advantage until the end of the day; the index initially retreated to zero, and in the last hour went into the red zone and closed with a decrease of 0.29% to the level of 786.15.