Closing Recap

U.S. stocks rallied broadly, reversing Friday’s losses, as reports of Iran signaling a desire to de-escalate tensions with Israel boosted market sentiment; oil and gold prices retreated from earlier highs, the dollar weakened, and Treasury yields were little changed ahead of this week’s FOMC meeting. 

Key Takeaways 

• Strong Rally on Easing Geopolitical Tensions: Equities surged (S&P +0.94%, Nasdaq +1.52%) after a WSJ report indicated Iran is seeking to end hostilities with Israel and resume nuclear talks. 
• Broad-Based Gains: Strength was widespread, with Technology, Communications, Financials, and Consumer Discretionary leading, while defensive sectors like Energy, Healthcare, and Utilities lagged. 
• Oil & Gold Retreat from Highs: Crude oil and gold prices pulled back significantly from overnight/early highs as immediate geopolitical risk premium faded on the Iran news. 
• Dollar Weakens Further: The U.S. dollar continued its decline, with the DXY hitting its lowest close since February 2023, supporting risk assets. 
• Yields Stable Ahead of Fed: Treasury yields were little changed as investors awaited the FOMC policy decision on Wednesday, where no rate change is expected. 
• Empire State Mfg Disappoints: The June Empire State Manufacturing Index came in much weaker than expected, highlighting ongoing regional factory weakness. 
• Busy Week Ahead: Focus on FOMC, Bank of Japan, Riksbank, and SNB meetings, plus quadruple witching and index rebalancing on Friday. 

Market Overview

U.S. equity markets opened higher and maintained their positive momentum throughout the session, decisively snapping Friday’s brief pullback. The primary catalyst for today’s strong risk-on sentiment was a Wall Street Journal report indicating that Iran has been urgently signaling a desire to end the recent hostilities with Israel and is open to resuming talks regarding its nuclear program. According to the report, Tehran has communicated through Arab intermediaries its willingness to return to negotiations, provided the U.S. does not join any attacks. This news significantly eased geopolitical fears that had spiked late last week, leading to a sharp reversal in safe-haven assets and a surge in equities. 

Index	Up/Down	% Change	Last
DJ Industrials	317.3	0.0075	42515
S&P 500	56.14	0.0094	6033
Nasdaq	294.39	0.0152	19701
Russell 2000	23.62	0.0112	2124

The rally was broad-based, with technology, communications, financials, and consumer discretionary sectors leading the charge. This marks a continuation of the market’s strong rebound from the April lows, driven by a combination of tariff de-escalation hopes and resilient corporate earnings. Despite the positive market action, the June Empire State Manufacturing Index, released this morning, painted a bleak picture of regional factory activity, coming in much weaker than anticipated with a notable plunge in new orders. However, investors largely looked past this disappointing data point, focusing instead on the positive geopolitical developments and positioning ahead of a crucial week for central bank decisions, including the FOMC meeting on Wednesday.

Economic Calendar

Yesterday’s U.S. economic calendar featured a notably weak regional manufacturing survey. Central bank meetings globally are a key focus this week: 

• NY Fed Empire State Current Business Conditions Index (June): -16.0 (Worse than -5.5 consensus, vs. -9.2 May). New Orders -14.2. Prices Paid +46.8. Employment +4.7. Six-month outlook improved to +21.2. 
• Key Central Bank Meetings This Week: FOMC (Wednesday – Rates expected unchanged at 4.25-4.50%) Bank of Japan (BoJ – Expected to hold at 0.50%) Riksbank (Wednesday – Mixed expectations) Swiss National Bank (SNB – Thursday – Cut of 25bp expected)

Commodities, Currencies, and Treasuries 

Gold prices fell, with August futures settling down $35.50 (-1.0%) at $3,417.30 per ounce. The decline came as easing geopolitical tensions between Iran and Israel reduced safe-haven demand, even as the U.S. dollar weakened. Gold had hit 8-week highs earlier in the session. Crude oil prices also retreated significantly from overnight highs, with WTI finishing down $1.21 (-1.66%) at $71.77/bbl. After initially spiking on weekend Israel-Iran news, prices reversed sharply lower following the Wall Street Journal report suggesting Iran is seeking de-escalation. The U.S. dollar index (DXY) weakened further, hitting its lowest close since February 2023, as risk appetite improved and perhaps on expectations of a dovish Fed tilt. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-1.21	USD/bbl	71.77
Brent	-1	USD/bbl	73.23
Gold	-35.5	USD/oz	3417.3
EUR/USD	0.0023	USD	1.1575
USD/JPY	0.24	JPY	144.33
10-Year Note	0.004	%	0.04446

The Euro gained against the dollar. U.S. Treasury yields were little changed across the curve, with the 10-year yield around 4.446%, as investors awaited the outcome of the FOMC meeting and future guidance. Money markets continue to price in the Fed leaving rates unchanged this week.

Looking Ahead 

The market will be keenly focused on the Federal Reserve’s policy statement and Chair Powell’s press conference on Wednesday. While no rate change is anticipated, any shifts in language regarding inflation, growth, or the impact of tariffs will be critical. Developments in the Middle East, particularly concerning Iran-Israel tensions and nuclear talks, will continue to influence oil prices and broader risk sentiment. Friday’s quadruple witching options expiration and index rebalancing could also contribute to increased trading volume and volatility later in the week.