A geopolitical shock from the Middle East collided with an already fragile market landscape Monday, sending oil surging nearly 5 percent while gold retreated to its lowest in 11 weeks. The dual pressure — a hawkish Federal Reserve repricing on one side and a sharp escalation between Israel and Iran on the other — left investors navigating one of the most complex cross-asset environments of the year, with SpaceX’s historic IPO now just four days away.
The S&P 500 extended its slide, shedding more than 3 percent from recent highs as a powerful May jobs report forced traders to abandon any lingering expectations of Federal Reserve rate cuts this year. The Nasdaq 100 bore the sharpest pain, dropping 5.6 percent from its recent peak above 30,000 to close around 28,957, its weakest level since late January. The Dow Jones Industrial Average gave back 1.35 percent from its weekly high.
The Bureau of Labor Statistics reported the U.S. economy added 172,000 jobs in May — more than double the median economist forecast of 85,000 — while the unemployment rate held steady at 4.3 percent. ADP separately reported private sector payrolls jumping by 122,000 and job vacancies surged by more than 700,000. With inflation having now remained above the Fed’s 2 percent target for more than five years, the data reinforced the base case for two rate hikes by year-end, with a December hike now fully priced into fed funds futures.
A second pressure valve opened simultaneously: a wave of capital-raising by the largest technology companies. Alphabet and Meta Platforms are collectively raising nearly $200 billion in equity to fund artificial intelligence infrastructure buildouts, a level of dilution that historically weighs on share prices during announcement windows. The Nasdaq’s semiconductor sector felt this acutely — the Philadelphia Semiconductor Index fell 7 percent on the week, with Broadcom, NVIDIA, and AMD among the top decliners following Broadcom’s disappointing forward guidance. The index has now surrendered most of its year-to-date gains.
Treasury Yields Climb as Fed Expectations Shift
The bond market moved swiftly to price in the new reality. The 10-year Treasury yield pushed firmly above 4.8 percent, the 2-year climbed toward 4.5 percent, and the 30-year reached its highest level since 2007 — a yield environment last seen before the global financial crisis. The curve remains inverted but has been steepening from the short end, a dynamic that historically precedes economic slowdown.
ING analysts noted in a client note that the jobs report had brought a full rate hike by December into scope, a dramatic reversal from just weeks ago when cuts were still the consensus view. “We now have a rate hike fully priced at the December FOMC meeting,” the bank said, adding that the labor market’s resilience removes the primary argument for easing. The shift has pushed the dollar index to a two-month high, compounding pressure on emerging market currencies and non-yielding assets alike.
Despite the lack of consistent messaging in the labour market data, we now have a rate hike fully priced at the December FOMC meeting. The strong jobs numbers remove the primary argument for easing — ING Research
Crypto Finds a Floor — But Outflows Persist
Bitcoin staged a modest recovery Monday, climbing 3.2 percent to trade near $63,357, while Ethereum added 4.38 percent to around $1,685. The broader altcoin market was firmer — Solana rose 5.46 percent, XRP gained 4.73 percent, and Cardano surged 7.71 percent. The bounce came after a brutal stretch that had pushed Bitcoin to its lowest since October 2024.
Yet the technical recovery masks persistent institutional pressure. Bitcoin spot ETFs recorded a 13th consecutive day of outflows Monday, with cumulative redemptions reaching $4.4 billion over that stretch — the longest sustained outflow streak since the products launched. BlackRock’s iShares Bitcoin Trust (IBIT) alone accounted for $3.3 billion in outflows over the prior week, while Grayscale and Fidelity funds also saw significant redemptions. Total assets under management across U.S. spot Bitcoin ETFs have fallen from $104 billion to roughly $82 billion in three weeks.
The Forces That Move Markets report from the prior week confirmed capital is rotating aggressively out of equities and into short-duration bonds and cash equivalents. Hedge funds reduced crypto exposure by 39 percent over the period, while traditional banks added 7,800 Bitcoin to their balance sheets — a divergence that suggests institutional redistribution rather than a broad exit from digital assets.
Gold Tumbles, Oil Surges — The Geopolitical Divergence
Gold experienced one of its sharpest pullbacks of the year, sliding more than 3 percent on Friday before stabilizing. Spot gold touched $4,296 per ounce — its lowest level in 11 weeks — before recovering modestly to around $4,341 by Monday morning. Futures for August delivery traded near $4,322. The metal remains up approximately 37 percent over the past year, and analysts are divided on whether the current dip represents a correction within a broader bull cycle or the start of a more sustained reversal.
The pressure on gold is a textbook case of competing forces: a stronger dollar and rising real yields normally act as a headwind for non-yielding gold, and that dynamic has overwhelmed the safe-haven demand that would typically follow a major geopolitical event. That event arrived Monday. Israel struck military sites in western and central Iran as well as a petrochemical facility near Mahshahr — marking the most significant attack on Iranian energy-linked infrastructure since the April ceasefire. Oil futures surged nearly 5 percent on the day, with the move adding to inflation concerns already elevated by tariff uncertainty.
Silver fell 1.2 percent to around $677 per ounce, while platinum slipped 0.9 percent to $1,764.58. The broad-based weakness across precious metals reinforces that macro factors — rate expectations, the dollar, and risk sentiment — are driving the complex rather than supply-specific catalysts. Natural gas rose 7.2 percent on a cold weather forecast, adding to energy cost pressures that could complicate any soft-landing scenario.
What Comes Next: A Week of Converging Catalysts
The calendar ahead is dense with potential catalysts. May’s Consumer Price Index report arrives Wednesday — the last major data point before the Federal Reserve’s blackout period begins. A hotter-than-expected reading would further cement the two-hike scenario and add pressure to equities and gold simultaneously. Thursday brings a double header: the Bank of England announces its rate decision while the European Central Bank holds — the ECB having already signaled an inflation-forecast revision that makes a June hike near-certain. The Bank of Japan concludes its two-day meeting Friday, with traders watching for any signals on further normalization.
And then there is SpaceX. The most anticipated IPO in market history is set to price Thursday and begin trading the following Monday, June 15. The company is offering shares at $135 each, implying a $1.75 trillion valuation and a $75 billion capital raise — numbers that will draw enormous capital flows from equities and crypto into the direct listing. Analysts at Bankless Times note that most major IPOs in recent years — Circle, Figma, Cerebras — declined in their first days of trading, suggesting some profit-taking from existing positions is already underway in anticipation.
For now, markets are caught between a hawkish domestic policy backdrop and a geopolitical shock that is reshaping energy prices in real time. The traditional playbook — sell equities, buy bonds, rotate to gold — is producing mixed signals when both yields and geopolitical risk are rising together. The next 72 hours, culminating in the CPI print, may determine whether this is a manageable rotation or the beginning of something more disorderly.