Market recap: Week ended June 19, 2026

Stock markets fluctuated through the week

Stock markets rallied sharply on Monday, as easing geopolitical tensions in the Middle East lifted investor sentiment. Reports that the U.S. and Iran had reached a preliminary agreement to end the conflict and reopen the Strait of Hormuz pushed oil prices down nearly 5%, easing inflation concerns. On Wall Street, the Dow rose 0.92% to a record high, while the S&P 500 gained 1.65%. The Nasdaq surged 3.07%, marking its strongest one-day advance since late March. Canada’s TSX also reached a record high, climbing 0.97%, supported by gains in the materials, technology and consumer discretionary sectors.

Markets took a breather on Tuesday, as investors rotated out of technology stocks. The Nasdaq and S&P 500 fell 1.15% and 0.57%, respectively, while the Dow advanced 0.64% to notch another record. In Canada, the TSX also extended its gains, rising 0.3%, led by strength in financials and metal mining stocks. Oil prices dropped 5% for a second consecutive day, as optimism around the Middle East agreement continued to build.

Selling pressure picked up on Wednesday, as investors reacted to the Federal Reserve’s (the Fed’s) latest policy decision. While the U.S. central bank held interest rates steady, markets moved lower on expectations that its next move could be a rate hike. Rebounding oil prices also hurt sentiment. The Dow fell 0.98%, snapping a two-day run of record highs. The S&P 500 and Nasdaq declined 1.21% and 1.34%, respectively. Canada’s TSX dropped 0.75%, ending a four-session winning streak.

Wall Street regained ground on Thursday, supported by strength in semiconductor shares and easing inflation concerns. The Nasdaq surged 1.87% and the S&P 500 gained 1.06. The Dow added a more modest 0.14%. In Canada, the TSX slipped 0.4%, weighed down by the energy sector, which declined 2.9% as news of an interim agreement between the U.S. and Iran improved the outlook for global oil supply. The materials sector also lost ground, falling 0.9% alongside weaker gold prices.

The TSX declined 0.3% on Friday, impacted by falling gold prices and a 2.1% decline in the materials sector, which includes metal mining shares. For the week, the TSX lost ground, down 0.2%. U.S. markets were closed on Friday for Juneteenth National Independence Day.

The Fed signalled a shift toward higher rates

The Fed held its benchmark interest rate unchanged at a range of 3.50% to 3.75% on Wednesday, in line with expectations. However, the U.S. central bank’s latest projections signalled a more hawkish outlook, as policy-makers indicated interest rates may rise in the months ahead to address inflation pressures.

New forecasts showed that most officials expect at least one rate hike by the end of 2026, marking a shift from earlier expectations for potential rate cuts. The Fed also removed language from its policy statement that had previously suggested easing was on the horizon, reinforcing the view that inflation remains a key concern.

In his first meeting as Fed Chair, Kevin Warsh emphasized the central bank’s commitment to restoring price stability, while signalling a broader shift in how the Fed communicates with markets. Warsh did not submit his own interest-rate projections. Instead, he suggested that the central bank may no longer provide forward guidance to encourage financial markets and investors to respond more directly to incoming economic data. Speaking after the decision, Warsh said that forward-looking guidance has become less helpful in shaping policy expectations, and the Fed’s streamlined policy statement approach is intended to “give you the facts as best we can judge it.” Reflecting that shift, Wednesday’s statement was significantly shorter than April’s release at 132 words compared with 350.

Retail sales and producer prices pointed to ongoing cost pressures

U.S. retail sales rose more than expected in May, highlighting continued strength in consumer spending. Data from the U.S. Census Bureau showed sales increased 0.9% month over month, ahead of forecasts for a 0.5% gain and accelerating from April’s revised 0.4% increase. On a year-over-year basis, retail sales climbed 6.9%, while sales excluding gas stations rose 0.7%, pointing to broad-based demand despite elevated price levels.

In Canada, retail sales also edged higher. Statistics Canada reported sales rose 0.5% in April to $73.0 billion, supported by stronger activity at gas stations and motor vehicle dealers. Sales increased in five of nine subsectors, led by a 5.1% gain at gasoline stations and fuel vendors, as well as a 1.7% rise at motor vehicle and parts dealers. Core retail sales, which exclude gasoline and motor vehicles, fell 0.7%, weighed down by declines in food and beverage retailers and general merchandise stores.

Producer prices in Canada continued to rise in May, reflecting ongoing pressure across global supply chains. Statistics Canada reported that the Industrial Product Price Index (IPPI) increased 1.2% over the month, marking a fifth consecutive monthly gain. On a year-over-year basis, producer prices were up 13.6%, the sharpest pace since mid-2022. Excluding oil and energy products, prices rose 0.9% monthly and 9.3% annually, suggesting broad underlying cost pressures.