Navigating the 12-Day War: Market Reactions and Economic Projections

Let's get to the big story breakdown.

While Wall Street trekking higher to kick off the week and extending gains in pre-market trade, Trump announced that Iran and Israel have agreed to a ceasefire, calling the conflict the 12 Day War.

But the ceasefire between Israel and Iran to get off to a shaky start, and this does come after the US struck 3 nuclear sites on Iran on Saturday and Iran launching missiles targeting a US base in Qatar.

Today the NATO summit is underway in The Hague and joining us to talk market reaction is Michael Ryanking, senior market strategist at the New York Stock Exchange.

Michael, good morning.

Thank you so much for joining me.

Good morning, Ramy.

Thanks for having me back.

Well, first and foremost, we are looking at the major stock averages, higher extended gains from yesterday's session, and this does come amid all the geopolitical tension, not just in the middle.

East but also other areas of the world as well, and the NATO summit is underway.

So what do you make of what we're seeing not just in the markets in particular equities, but oil?

Yeah, so I mean, clearly this seems to have marked kind of a de-escalation of the situation in the Middle East, right?

Markets are reacting with kind of a risk on move.

You're looking at kind of equity markets up around just under 1%.

Oil markets are pulling back sharply.

You know, it's pretty interesting that you know equity markets were pretty early to sniff this out, right?

I mean the immediate reaction to the Israeli strikes was met was a pretty tepid response within equity markets.

We did see oil move higher, you know, but, but you kind of equities kind of held up throughout.

This entire escalation and now we're kind of once again kind of retesting the very recent highs, you know, kind of right around 6060 for the S&P 500 once we open and that'll put us within kind of under 2% of the all-time high, you kind of right around 6150.

Yeah, and Michael, there's a heat wave going on and it's a reminder that it is summer here, but at the same time July 4th is right around the corner, and when it comes to the US, there is still this uncertainty about tariffs and how all of it will play out.

And we also know that with July 4th we will be watching the big beautiful bill closely in terms of any progress.

So what are you watching as we head into the upcoming week?

Absolutely.

So I mean market.

You know, markets have been very, very resilient, right, and we continue to kind of work through each one of these you know kind of kind of catalysts as they as they come to fruition.

But if you think about it, if you take one step back, right, the S&P 500 is essentially unchanged for the last 6 months, right?

The first time we broke above 6000 was, you know, kind of right in the middle of November, and we've outside of the very sharp drawdown we saw ahead of Liberation Day and then the response.

On the back end, we've essentially kind of traded in a sideways, you know, kind of sideways response from here, right, you know, the next kind of two big catalysts that we have are the big beautiful bill as you sort of mentioned and then we also have kind of the ultimate trade negotiations, right?

We still only have seen kind of one negotiated deal with the UK at this point, right, we're hoping to, you know, we should have uh you know.

The deadline is July 9th, so we're hoping to get at least a framework for some of those other deals kind of in the coming weeks.

That's kind of the next, you know, kind of big hurdle I see for markets, you know, and hopefully you kind of as we move through July that we're going to get into earnings season, which is also always always a big.

Yeah, and Michael, this is the first time you've been on since we got that rate announcement as well as the summary of economic projections from the Federal Reserve, and we're starting to hear from other Officials as well and last week Powell said that if it had not been for the tariffs, then a rate cut would be incoming.

So what do you make that what do you make of that?

And we are getting PC on Friday as well.

Absolutely.

So yeah, I mean, look, as widely expected, the Fed left rates unchanged.

Chair Powell's message was very consistent with what he said.

The economy remains in a good place.

The fact that the economy continues to remain resilient allows them to be patient.

In kind of moving monetary policy on a go forward basis, you know, he acknowledged, as you mentioned, the improvement in the inflation data, though he still thinks it's too early to see kind of the impacts of of tariffs, you know, and expects to see that kind of coming towards the end of the summer.

I think like you know the the uh there's kind of two parts here.

So, you know, one of the Things that he sort of talked about is that you know you haven't seen the impact of inflation um but if If President Trump were to kind of remove kind of the upper end of potential tariffs, right, I think that would give the Federal Reserve a little bit more confidence in being able to move forward.

So he does until that ultimate tariff rate is known, right, he's he's sort of saying if you cut tariff rates, we'll we'll we'll cut interest rates, something that kind of Goldman Sachs has talked about. piece with what you mentioned in terms of kind of other officials.

Chair Waller, I mean a Fed Fed Waller is aiming to be chair, right?

He's he's been, you know, kind of one of the Fed officials that's been at the forefront in general kind of over the years though that, you know, with his positioning to try to take that chair role, right, it does kind of. deemphasize some of his commentary, I think a little bit and then Michele Bowman was also kind of a recent Trump appointee, right?

So you know you have to kind of take some of that commentary with a grain of salt.

OK, well, Michael, we will have to leave it there, but as always, thank you so much for joining me and thank you for breaking all of this down.

Thanks for having me.

See you next week.

See you next week.