Rich Asplund
8 min read
In This Article:
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.”
