Christine Idzelis

Sun, Jun 22, 2025, 7:27 AM7 min read

Tariffs and the widening Middle East conflict are casting clouds over the stock market’s June gains, with a potentially turbulent summer ahead after the S&P 500’s recent push toward its record high.

“We’re entering the greater-fool phase,” said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, in a phone interview with MarketWatch. “What we’re telling investors is, ‘Look, don’t play that game,’ ” he said — explaining that, with the U.S. stock market getting back toward all-time highs, “you’re not getting paid to take the risk until maybe later this year.”

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The S&P 500 SPX closed modestly lower Friday but remained up 0.9% so far in June after a strong recovery in May from the lows following President Donald Trump’s “liberation day” tariff reveal in early April, according to Dow Jones Market Data. The index ended the trading session 2.9% below its record closing high, notched Feb. 19.

The U.S. stock market appears vulnerable to pullbacks partly because of still uncertain tariff policy, with the White House’s pause on certain levies due to expire in July. On top of that lingering worry, rising tensions in the Middle East kept investors on edge heading into the weekend as Trump publicly weighed a strike on Iran.

On Saturday night Trump announced that the U.S. had launched strikes on Iran’s nuclear facilities, working with Israel in what Trump called a “spectacular military success.”

Joint Chiefs of Staff Chairman Dan Caine, an Air Force general, observed early Sunday at a Pentagon press briefing that damage assessments were ongoing.

Worries over the potential for a broadening of the Israel-Iran conflict helped put geopolitical tensions high on the list of risks faced by the stock market, according to Samana.

Any “illusion of containment” was shattered late Saturday, Stephen Innes, managing partner at SPI Asset Management, observed in a note.

In Samana’s view, the situation in the Middle East poses the threat of a “dual shock” from a potential further spike in oil prices that fuels higher inflation but also risks pushing down the rate of economic growth. U.S. oil prices CL00 have jumped in June to around $74 a barrel on Friday, FactSet data show.