On Tuesday, U.S. stock markets surged sharply: the S&P 500 and Nasdaq 100 hit four-month highs, while the Dow Jones climbed to its highest level in three and a half months. The rally was driven by news of a preliminary ceasefire between Israel and Iran, coupled with a steep decline in oil prices — a combination that eased inflationary concerns and boosted confidence in the broader macroeconomic outlook.
Geopolitical Relief and Oil: A Dual Catalyst
President Donald Trump announced a ceasefire agreement between Israel and Iran. The markets responded immediately, with risk appetite soaring across the board. Simultaneously, WTI crude oil prices tumbled 6.1% to $64.46 per barrel, marking the lowest level in over a week. The drop in energy prices significantly lowered inflation expectations and pushed U.S. 10-year Treasury yields down to 4.30% — a 1.5-month low.
Fed Policy: “Wait and See” Approach
Despite the easing inflation pressure, Federal Reserve Chair Jerome Powell gave no clear signal of imminent rate cuts. Addressing Congress, Powell emphasized the need for patience amid ongoing tariff uncertainties. Regional Fed presidents Williams (New York) and Bostic (Atlanta) echoed this cautious stance, saying it is appropriate to keep interest rates unchanged for now.
Nevertheless, rate futures began to price in a 19% probability of a 25-basis-point rate cut at the July FOMC meeting.
Macroeconomics: Weak Consumer Confidence, Mixed Data
June’s Conference Board Consumer Confidence Index dropped unexpectedly to 93.0 — far below expectations of 99.8. Similarly, the S&P CoreLogic Case-Shiller 20-City Home Price Index showed just a 3.42% YoY increase, the slowest pace in nearly two years. However, the Richmond Fed Manufacturing Index surprised to the upside, providing some balance to the macro data.
Winners and Losers
Top Gainers:
Semiconductors: Advanced Micro Devices (+6%), Intel (+6%), Marvell (+5%), Micron, Applied Materials and others — supported by AI and tech optimism.
Travel and Airlines: Carnival (+6.88%), Norwegian (+4%), American Airlines, Delta, Alaska Air — up on lower fuel costs.
Uber (+7%) and Lyft (+5%) — driven by autonomous ride news and analyst upgrades.
Dexcom (+9%) — after a major U.S. health campaign promoting wearable medical devices.
Fiserv (+6%) — following its stablecoin integration partnership with Mastercard.
Notable Decliners:
Energy Sector: Occidental, Exxon, Chevron, ConocoPhillips — down 2–3% amid falling oil prices.
Defense Contractors: Lockheed Martin, RTX, Northrop Grumman — under pressure following geopolitical de-escalation.
Gold Miners: Newmont, AngloGold, Gold Fields — dropped due to falling gold prices.
Auto Parts Retailers: Advanced Auto Parts fell 7% after a downgrade by Goldman Sachs.
Global Markets Join the Rally
Europe: Euro Stoxx 50 rose 1.44%, buoyed by Germany’s IFO business climate index hitting a 13-month high.
China: Shanghai Composite gained 1.15%, reaching a 3-month high.
Japan: Nikkei 225 climbed 1.14%, reaching a 4-month peak.
European bond yields were mixed: German yields rose, while UK yields fell, reflecting differing inflation outlooks.
Key events for the remainder of the week:
Will the ceasefire between Israel and Iran hold?
Jerome Powell’s Senate testimony (Wednesday)
U.S. new home sales, GDP revision, jobless claims, and inflation data (Thursday–Friday)
University of Michigan Consumer Sentiment Index (Friday)
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