Stock Market Today: Markets Retreat From Record Highs as Risk Appetite Wanes

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Stocks retreated from record highs Friday as risk appetite waned amid a political crisis in France and slumping U.S. consumer sentiment. Nevertheless, equities overcame a more hawkish stance from the Federal Reserve to end the week with gains.

The market ended a strong week on a downbeat note. Equities in Europe sold off ahead of the U.S. open after French President Emmanuel Macron's call for a snap election stoked fears that his centrist, pro-business Renaissance party could lose parliamentary seats to the far-right National Rally party or a left-wing coalition.

As for economic news in the U.S., a measure of consumer sentiment unexpectedly fell to a seven-month low as folks continued to struggle with higher prices. The University of Michigan Consumer Sentiment Index for June declined for a fourth consecutive month to 65.6. Economists were looking for the sentiment reading to rise to 72 from 69.1 a month ago.

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"Elevated prices and weakening income opportunities caused survey respondents to report souring feelings regarding personal finances," writes José Torres, senior economist at Interactive Brokers. "Lower gasoline prices have failed to help consumer sentiment in the past few months, a significant occurrence considering that the University of Michigan's gauge of shoppers' moods strongly correlates with costs at the pump."

Although stocks struggled Friday, the major benchmarks ended the week with solid gains despite the central bank's rate-setting committee taking a more hawkish turn on Wednesday. The Federal Open Market Committee (FOMC) concluded its two-day meeting with a forecast of just one quarter-point cut to the short-term federal funds rate before year-end.

As of June 14, futures traders assigned a 61% probability to the Fed enacting its first cut to interest rates in September, according to CME Group's FedWatch Tool.

The earnings calendar is comparatively light next week – as is the economic calendar – leaving market participants free to react to scheduled interviews and speeches by seven different Fed officials.

ADBE stock rallies on outlook

Adobe (ADBE) had its best session in four years, jumping 14.5% after the company raised its full-year revenue forecast. The software maker first announced its foray into generative artificial intelligence (AI) a year ago, but investors have been waiting to see if Adobe's Firefly AI tools will help boost top- and bottom-line results.

"We see a decent likelihood that investors are stuck in a Firefly trough of disillusionment currently, and our sense is that monetization could start to gradually build in the second half and into next year," wrote J.P. Morgan analyst Mark Murphy, who lifted his recommendation on ADBE to Overweight (the equivalent of Buy) from Neutral (Hold.)

Adobe stock has been a market-laggard over the past few years, but it's been a buy-and-hold winner for long-term shareholders. Indeed, anyone who put $1,000 into ADBE stock 20 years ago would be very happy with the returns.

As for the major indexes, the blue chip Dow Jones Industrial Average slipped 0.2% to 38,589, while the broader S&P 500 fell fractionally to 5,431. The tech-heavy Nasdaq Composite added 0.1% to 17,688.

Coming up: the earnings calendar is comparatively light next week – as is the economic calendar – leaving market participants free to react or overreact to several scheduled speeches by Fed officials.

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Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.

A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about markets and macroeconomics.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.