The S&P 500 Index ($SPX) (SPY) today is up +0.43%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.60%. September E-mini S&P futures (ESU25) are up +0.50%, and September E-mini Nasdaq futures (NQU25) are up +0.70%.
Stock indexes today are moving higher on speculation that Iran’s response to the US bombing of its nuclear sites is unlikely to significantly disrupt oil supplies from the Middle East. WTI crude oil prices gave up early gains and dropped into negative territory, falling back from an overnight surge of more than +6% in the initial reaction to the US strike on Iran’s nuclear facilities.
Stock indexes extended their gains today on better-than-expected US economic reports on Jun S&P manufacturing PMI and May existing home sales. Also, the 10-year T-note yield fell to a 1-week low today to give stocks a boost after Fed Governor Bowman said she favored a Fed rate cut at next month’s FOMC meeting. The 10-year T-note yield is down -5 bp to 4.33%
The June S&P US manufacturing PMI was unchanged at 52.0, stronger than expectations of a decline to 51.0.
US May existing home sales unexpectedly rose +0.8% m/m to 4.03 million versus expectations of a -1.3% m/m decline to 3.95 million.
Fed Governor Bowman said, “Should inflation pressures remain constrained, I would support lowering the fed funds policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market.”
Stocks are being undercut by concern that the US strikes over the weekend on Iran’s nuclear facilities could lead to an escalation of the Israel-Iran conflict. Iran vowed retaliation and kept up attacks on Israel today, while Israeli forces kept up strikes on Iranian military sites and airports. Iran’s army command said the US has directly entered into war and should await “severe consequences” and that the Iranian army is “now free to take any action” against US interests. President Trump said he would respond with “far greater” force to any Iranian retaliation on US assets.
So far, Iran has not tried to close the vital Strait of Hormuz, which handles about 20% of the world’s daily crude shipments and also 20% of the world’s LNG shipments. However, Iran’s parliament on Sunday called for the closure of the strait, although that cannot happen without approval from Supreme Leader Khamenei. Energy research firm Kpler Ltd. said, “If Iran blocks the Strait of Hormuz, even for one day, oil can temporarily hit $120 to $150 a barrel, and if it attacks major oil production or export facilities in neighboring countries, it may drive up prices higher for longer.”
The markets this week will focus on any retaliation by Iran for the US attacks of its nuclear facilities. Also, any new tariff news or trade deals will be scrutinized. On Tuesday, the Conference Board June US consumer confidence index is expected to climb +1.8 to 99.8. Also, Fed Chair Powell on Tuesday will testify before the House Committee on Financial Services for the Fed’s semi-annual monetary policy report. 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 up +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 23% for a -25 bp rate cut at the July 29-30 FOMC meeting.
Overseas stock markets today are mixed. The Euro Stoxx 50 is down by -0.16%. China’s Shanghai Composite closed up +0.65%. Japan’s Nikkei Stock 225 fell to a 1-week low and closed down -0.13%.
Interest Rates
September 10-year T-notes (ZNU25) today are up +13 ticks. The 10-year T-note yield is down -5.1 bp to 4.324%. T-notes today are moving higher as the weekend attacks by the US on Iran’s nuclear facilities have escalated tensions in the Middle East and boosted safe-haven demand for government debt. Gains in T-notes accelerated today due to dovish comments from Fed Governor Bowman, who said she favored cutting interest rates at next month’s FOMC meeting.
Today’s stronger-than-expected US economic reports, including the June S&P manufacturing PMI and May existing home sales, were bearish for T-notes. Also, supply pressures are a negative for T-notes as the Treasury will auction $211 billion of T-notes and floating rate notes this week, beginning with Tuesday’s $69 billion auction of 2-year T-notes.
European government bond yields today are moving lower. The 10-year German bund yield is down -0.8 bp to 2.510%. The 10-year UK gilt yield fell to a 1-week low of 4.488% and is down -3.6 bp to 4.500%.
The June S&P Eurozone manufacturing PMI was unchanged at 49.4, weaker than expectations of an increase to 49.7. Also, the June S&P Eurozone composite PMI was unchanged at 50.2, weaker than expectations of an increase to 50.4.
ECB Governing Council member Centeno said, “The supply and demand conditions are still too weak in the Eurozone to allow a return to the 2% inflation target without further stimulus.”
The June S&P UK manufacturing PMI rose +1.3 to a 5-month high of 47.7, stronger than expectations of 46.8.
Swaps are discounting the chances at 6% for a -25 bp rate cut by the ECB at the July 24 policy meeting.
US Stock Movers
Defense contractors are climbing today due to the escalation of the Israel-Iran conflict. Huntington Ingalls Industries (HII), Northrop Grumman (NOC), General Dynamics (GD), and L3Harris Technologies (LHX) are up more than +1%.
Tesla (TSLA) is up more than +9% to lead gainers in the S&P 500 and Nasdaq 100 after launching its driverless taxi service to some riders in Austin, Texas.
Northern Trust (NTRS) is up more than +8% after the Wall Street Journal reported that Bank of New York Mellon approached the company to express interest in a possible merger.
FactSet Research Systems (FDS) is up more than +5% after forecasting full-year revenue of $2.31 billion-$2.33 billion, the midpoint above the consensus of $2.21 billion.
Estee Lauder (EL) is up more than +3% after Deutsche Bank upgraded the stock to buy from hold with a price target of $95.
Circle Internet Group (CRCL) is up more than +15%, adding to last week’s +65% surge after the US Senate passed stablecoin legislation setting up regulatory rules for cryptocurrencies pegged to the dollar.
DoorDash (DASH) is up more than +4% after Raymond James upgraded the stock to strong buy from outperform with a price target of $26.
Advanced Micro Devices (AMD) is up more than +2% after Melius Research upgraded the stock to buy from hold with a price target of $175.
Fiserv (FI) is up more than +2% after the Wall Street Journal reported the company plans to launch a stablecoin and platform for its clients.
Cruise line operators are under pressure as today’s jump in crude prices to a 5-1/4 month high will boost fuel costs and eat into profits. Norwegian Cruise Line Holdings (NCLH) is down more than -5% to lead losers in the S&P 500. Also, Carnival (CCL) is down more than -2%, and Royal Caribbean Cruises Ltd (RCL) is down more than -1%.
Energy stocks are sliding today after WTI crude gave up a 6% rally and turned lower. APA Corp (APA) is down more than -4%, and Haliburton (HAL) is down more than -3%. Also, Diamondback Energy (FANG) and Devon Energy (DVN) are down more than -2%. In addition, Baker Hughes (BKR) is down more than -1%.
Super Micro Computer (SMCI) is down more than -4% after announcing its plans to offer $2 billion of senior convertible notes due 2030.
Dow Inc (DOW) is down more than -1% after BMO Capital Markets downgraded the stock to underperform from market perform with a price target of $22.
Earnings Reports (6/23/2025)
Commercial Metals Co (CMC), FactSet Research Systems Inc (FDS), KB Home (KBH).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
