Stocks Are Volatile Right Now. Why Gold and Other Havens Aren’t Safe Either.

The Iran-Israel war has plunged the stock market back into choppy waters. But investors seem unable to find a lifeboat that can carry them to safety.

The conflict has moved into a dangerous new phase after President Donald Trump called for Iran’s “unconditional surrender,” and stocks are feeling the pressure. Wall Street’s most widely followed fear gauge—the Cboe Volatility Index, or VIX—jumped Tuesday to above 20, the level that tends to signal heightened volatility.

Still, investors’ default safe haven didn’t benefit from the chaos. Gold prices dropped—only the 17th time out of 114 trading days this year that both bullion and the S&P 500 have fallen. Some analysts believe the precious metal is overvalued after a stellar run, so its recent drop could be a sign of things to come.

The U.S. bond market doesn’t look like much of a refuge, either, with Treasury yields ticking up in recent months due to concern about Trump’s signature tax bill.

The dollar is also struggling. Global fund managers haven’t been this down on the greenback in at least two decades amid fears that sweeping tariffs could trigger a slump in U.S. growth, and that’s put the dollar on pace for one of its worst first-half performances against its major peers on record.

In terms of trades, sitting tight might be the best strategy. To diversify now risks missing out on a stock market rebound if the Middle East conflict de-escalates—or resolves in a way that brings about lasting peace in the region.

With Wall Street’s go-to havens looking shaky, investors’ best bet may be to hold their nerve and then ride the wave.

—George Glover

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Trump’s Apparent Iran Escalation Brings Uncertainty Back

A series of social media posts by President Donald Trump, who departed early from the Group of Seven summit in Canada early Tuesday, had Wall Street worried again about an escalation in the Israel-Iran conflict and what that would mean for markets. Uncertainty has settled back in.

• Earlier, traders were trying to separate signal from noise, but the gloom returned after Trump demanded an unconditional surrender by Iran. Trump met advisors for more than an hour in the White House Situation Room, and reports said he was weighing options including a potential U.S. strike against Iran.
• Until Tuesday, U.S. has avoided overtly participating in Israel’s strikes on Iran, which began Thursday. Trump’s visible wavering raises the risks of damaging escalation, analysts say, even if he is merely bluffing. Trump said patience was wearing thin and called Iranian Supreme Leader Ayatollah Ali Khamenei an easy target.
• Oil spiked. West Texas Intermediate climbed 4.3% to $74.84 a barrel, and Brent crude, the international benchmark, added 4.4%, to $76.45 a barrel. Brent is up nearly 20% so far this month, according to Dow Jones Market Data.
• As he left the G-7 meeting, Trump said the Iranian capital of Tehran, home to around nine million people, should be “immediately” evacuated. Energy markets are on edge over a potential blockage of the Strait of Hormuz, a crucial oil and liquefied natural gas transportation route.

What’s Next: Others weighed in on the Israel-Iran situation, too. Vice President JD Vance posted that the president may decide he needs to take further action, while German Chancellor Friedrich Merz said after meeting with Trump at the G-7 summit that U.S. participation in Israeli military strikes was discussed.

—Matt Peterson, Liz Moyer, and Martin Baccardax

Retail Sales Weaker Than Expected in May as Fed Meets

Americans dialed back their spending in May after a burst of buying in April as they tried to get ahead of tariff price hikes, contributing to a steeper-than-expected 0.9% drop in retail and food services sales last month.

• May’s decline was driven by a continued pullback in car and car-part sales, which fell 3.5% from the prior month after dropping in April. Sales of building supplies and home-improvement products dropped 2.7%, and restaurant spending dropped 0.9%.
• The weak report came a day before the Federal Reserve is scheduled to make its next interest-rate move, and release its revised economic projections. Tariff and geopolitical uncertainties mean the Fed may not make the two quarter-point rate cuts in 2025 that economists had forecast earlier.
• Bret Kenwell, an analyst at eToro, said the May retail sales report was a “fairly tepid” headline number. The economy and the consumer are holding up for now, he said, but there are “signs of vulnerability” that could pose risks in the second half, especially if jobs or spending slows further.
• Notably the so-called control group of retail sales—excluding autos, gasoline, building materials, and restaurant dining—gained 0.4% in May from April, in line with expectations. That indicates the spending component of real GDP growth is still on track for 2% annualized growth in the second quarter.

What’s Next: Bradley Saunders, Capital Economics’ North America economist, attributes the weakness in May retail sales to “temporary drags from the end of tariff front-running” and the unseasonably wet weather in the eastern U.S. He expects the sales slump to reverse in June.

—Megan Leonhardt and Janet H. Cho

Stablecoin Bill Gets Senate Approval with Bigger Crypto Goals in Sight

The Senate passed a bill Tuesday evening to regulate stablecoins. It’s a victory the cryptocurrency industry has sought for years but crypto executives hope to persuade Congress to go further.

• Lawmakers voted 68-30 on the Genius Act bill, with 18 Democrats joining the bulk of Senate Republicans in favor of the legislation. The bill cleared a key procedural hurdle in May and was expected to easily garner the votes needed to pass.
• The bill limits stablecoin reserves to safe, liquid assets, such as Treasuries, clarifies how they’re regulated, and creates a path for banks to issue their own coins. It will now head to the House of Representatives with some lawmakers hoping to get it to President Trump’s desk by the end of July.