Stocks Supported as Tensions Ease in the Middle East

The S&P 500 Index ($SPX) (SPY) today is up +0.81%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.79%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.15%.  September E-mini S&P futures (ESU25) are up +0.84%, and September E-mini Nasdaq futures (NQU25) are up +1.15%. 

Stock indexes are trading higher today, with the S&P 500 and Nasdaq 100 posting 4-month highs and the Dow Jones Industrials posting a 1-1/2 week high.  Global equity markets rallied, and WTI crude oil prices are down sharply by more than -5%, after President Trump announced that Israel and Iran had agreed to a tentative ceasefire, spurring hopes for a lasting resolution to the conflict.  The easing of geopolitical risks has boosted market sentiment and prompted a risk-on for asset markets.

Stocks fell back from their best levels after the Conference Board June US consumer confidence index unexpectedly declined.  Also, hawkish Fed commentary today signaled the Fed is in no rush to cut interest rates.  Fed Chair Powell said, “The effects of tariffs will depend, among other things, on their ultimate level, and for the time being, we are well-positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.” Also, Atlanta Fed President Bostic said the Fed doesn’t need to cut interest rates with companies planning to raise prices later this year in response to higher import taxes and with the job market still stable.

The US Apr S&P CoreLogic composite-20 home price index rose +3.42% y/y, weaker than expectations of +3.90% and the smallest increase in 1-3/4 years.

The Conference Board June US consumer confidence index unexpectedly fell -5.4 to 93.0, weaker than expectations of an increase to 99.8.

The US June Richmond Fed manufacturing conditions survey unexpectedly rose +2 to -7, stronger than expectations of a decline to -10.

The markets this week will look to see if the ceasefire between Israel and Iran holds. Also, any new tariff news or trade deals will be scrutinized.  On Wednesday, Mr. Powell will testify before the Senate Banking Committee on monetary policy.  Also, on Wednesday, US Mar new home sales are expected to fall -6.7% m/m to 693,000. On Thursday, Q1 GDP is expected to be unrevised at -0.2% (q/q annualized).  Also, weekly initial unemployment claims are expected to be unchanged at 245,000.  Friday brings May personal spending (expected +0.1% m/m) and May personal income (expected +0.3% m/m).  Also, the May core PCE price index, the Fed’s preferred price gauge, is expected to rise by +0.1% m/m and +2.6% y/y.  Finally, the revised June University of Michigan US consumer sentiment index is expected to fall -0.2 to 60.3. 

The markets are discounting the chances at 21% for a -25 bp rate cut at the July 29-30 FOMC meeting.

Overseas stock markets today are sharply higher.  The Euro Stoxx 50 climbed to a 1-week high and is up +1.41%.  China’s Shanghai Composite rose to a 3-month high and closed up +1.15%.  Japan’s Nikkei Stock 225 rallied to a 4-month high and closed up +1.14%.

Interest Rates

September 10-year T-notes (ZNU25) today are up +3 ticks.  The 10-year T-note yield is down -3.7 bp to 4.310%.  Sep T-notes recovered from early losses today and moved higher as a -5% plunge in WTI crude oil knocked inflation expectations lower and sparked short covering in T-notes.  The 10-year breakeven inflation rate fell to a 1-week low of 2.286%.  Also, an unexpected decline in the Conference Board US Jun consumer confidence index is bullish for T-notes.

T-notes today initially moved lower as the announcement of a tentative ceasefire between Israel and Iran has sparked a sharp rally in global equity markets and reduced safe-haven demand for T-notes.  T-notes extended their losses on hawkish comments from Fed Chair Powell, who signaled he is in no rush to cut interest rates.  Supply pressures are weighing on T-notes as the Treasury will auction $211 billion of T-notes and floating rate notes this week, beginning with today’s $69 billion auction of 2-year T-notes.

European government bond yields today are mixed.  The 10-year German bund yield rose to a 1-week high of 2.573% and is up +2.4 bp to 2.531%.  The 10-year UK gilt yield fell to a 1-week low of 4.467% and is down 2.5 bp to 4.468%.

The German Jun IFO business climate index rose +0.9 to a 13-month high of 88.4, stronger than expectations of 88.0.

ECB Governing Council member Villeroy de Galhau said.  “If we look at the present assessment of markets so far, inflation expectations remain moderate.  If that was confirmed, it could possibly lead in the next six months to further accommodation.”

Swaps are discounting the chances at 8% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

US Stock Movers

Chip makers are rallying today to lift the broader market.  Advanced Micro Devices (AMD) is up more than +5% to lead gainers in the Nasdaq 100, and Intel (INTC) is up more than +5%.  Also, NXP Semiconductors NV (NXPI) and Marvell Technology (MRVL) are up more than +4%.  In addition, Micron Technology (MU), KLA Corp (KLAC), Applied Materials (AMAT), Broadcom (AVGO), Lam Research (LRCX), GlobalFoundries (GFS), and Microchip Technology (MCHP) are up more than +3%. 

Airline stocks and cruise line operators are climbing as crude prices plunged more than -4% to a 1-1/2 week low on the announcement of a ceasefire in the Israel-Iran conflict.  Carnival (CCL) is up more than +9% to lead gainers in the S&P 500, and Norwegian Cruise Line Holdings (NCLH) is up more than +6%.  Also, American Airlines Group (AAL) is up more than +3%, and Delta Airlines (DAL), Alaska Air Group (ALK), and Royal Caribbean Cruises Ltd (RCL) are up more than 2%.

Upstart Holdings (UPST) is up more than +8% after Piper Sandler assumed coverage of the stock with a recommendation of overweight and a price target of $75. 

Uber Technologies (UBER) is up more than +6% after beginning its driverless ride service in Atlanta. 

Lyft (LYFT) is up more than +4% after TD Cowen upgraded the stock to buy from hold with a price target of $21. 

Mastercard (MA) is up more than +1% after deepening its partnership with Fiserv to integrate its new FIUSD token across a range of Mastercard products and services. 

Teladoc Health (TDOC) is up more than +1% after Citron Research said the market is underestimating the value of the virtual health-care platform. 

Defense contractors are sliding today with the announcement of a ceasefire in the Israel-Iran war.  RTX Corp (RTX) is down more than -3% to lead losers in the S&P 500.  Also, Northrop Grumman (NOC) is down more than -2%, and Huntington Ingalls Industries (HII), Lockheed Martin (LMT), General Dynamics (GD) and L3Harris Technologies (LHX) are down more than -1%. 

Precious metals mining stocks are under pressure today, with the price of COMEX gold falling to a 2-week low.  Anglogold Ashanti Plc (AU) is down more than -4% and Gold Fields Ltd (GFI) is down more than -3%.  Also, Newmont (NEM) is down more than -2%.

Advanced Auto Parts (AAP) is down more than -8% after Goldman Sachs downgraded the stock to sell from neutral with a price target of $46.  Also, O’Reilly Automotive (ORLY) is down more than -2% to lead losers in the Nasdaq 100.

Dollar General (DG) is down more than -2% after Goldman Sachs downgraded the stock to neutral from buy.

Chewy (CHWY) is down more than -2% after holder BC Partners offered 23.95 million shares at $41.95/share, below Monday’s closing price of $43.36. 

Earnings Reports (6/24/2025)

AeroVironment Inc (AVAV), Anterix Inc (ATEX), Borr Drilling Ltd (BORR), Carnival Corp (CCL), FedEx Corp (FDX), Gencor Industries Inc (GENC), NexPoint Diversified Real Estate Trust (NXDT), TD SYNNEX Corp (SNX), Worthington Enterprises Inc (WOR).