Weekly Investment Perspective

U.S. equities posted a modest weekly gain as investors navigated a volatile stretch of Iran-driven headlines before finishing the week on a notably optimistic note. The S&P 500 and NASDAQ rose 0.7% for the week, and the Dow gained 0.66%. Markets spent much of the week whipsawing between escalation fears and deal optimism, with the Dow falling nearly 900 points Wednesday after Trump warned Iran would “have to pay the price” for slow negotiations, before recovering sharply Thursday on signals that a formal agreement was close. Over the weekend, both sides confirmed the outlines of a 14-point interim peace agreement under which the U.S. would lift oil sanctions and Iran would reopen the Strait of Hormuz within 30 days. Formal signing is expected to take place in Switzerland on Friday. WTI crude fell more than 5% on the news.

The weekend agreement, if signed as expected, would represent the most meaningful de-escalation yet in the U.S.-Iran conflict that began February 28, though it is more of a temporary framework for further negotiations than a final peace agreement. Under the draft terms, the 60-day ceasefire would be extended, the U.S. naval blockade of Iranian ports would be lifted alongside oil sanctions, and Iran would reopen the Strait of Hormuz while broader negotiations continue over its nuclear program and sanctions relief. The ECB raised its key rate a quarter point to 2.25% Thursday, citing war-driven inflation, and 10-year Treasury yields pushed back above 4.40% on the week. A durable de-escalation to the conflict would remove the single largest source of energy price inflation in the current cycle and could meaningfully shift the Fed’s rate trajectory heading into the second half of the year.

Last week’s economic data reinforced the market’s central tension: inflation remains too firm for the Fed to declare victory, but the economy is not showing the type of broad weakness that would force an immediate policy pivot. May CPI rose 0.5% for the month and 4.2% year-over-year, with energy accounting for much of the increase, while core CPI was more contained at 0.2% for the month and 2.9% year-over-year. Producer prices told a similar story, with headline PPI pressured by higher energy costs even as some underlying components were less alarming. Labor data also softened at the margin, with initial jobless claims rising to a three-month high, though continuing claims remain low by historical standards. Consumer sentiment rebounded modestly in June from May’s record low but remains depressed. Taken together, the data support a Fed that is likely to remain cautious rather than rush toward either easing or tightening.”

SpaceX debuted on the Nasdaq Friday under the ticker SPCX, raising $75 billion at an offer price of $135 per share and immediately became one of the world’s largest listed companies. Shares closed up 19% on the day, pushing SpaceX’s market capitalization above $2 trillion on its first day of trading. The offering surpassed Saudi Aramco’s 2019 record by more than 2.5 times, making it the largest IPO in market history. SpaceX is being fast tracked and will join most major U.S. equity indices between 6/19 and 7/3 (5 to 15 trading days), with the exception of the S&P 500 which will not allow inclusion until 12 months after IPO and only if certain profitability and liquidity requirements have been met. MSCI index inclusion will begin June 29, meaning structural buying from passive funds will a demand layer to a stock that closed its first day up 19%. Whether that first-day enthusiasm holds will be among the more watched stories heading into the week.

The dominant event this week is Warsh’s first FOMC decision on Wednesday, June 17. No rate move is expected, but investors will be watching the updated dot plot and press conference closely for any signal that the Fed is moving away from an easing bias and toward a more neutral stance. Market-implied odds of a rate hike before year-end rose toward 60% late last week before easing somewhat after the U.S.-Iran MOU helped reduce near-term energy-price pressure. The economic calendar will also matter, with May industrial production due Monday and May retail sales on Wednesday offering a timely read on manufacturing momentum and consumer demand. For markets, the key question is whether cooling geopolitical risk, resilient earnings, and enthusiasm around AI and new issuance can continue to offset a Fed that is not yet ready to sound dovish.

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