Despite the limelight on crude oil prices, the US stock market defied the threat of the closure of the Strait of Hormuz by Iran, with the Nasdaq Composite, Dow Jones, and S&P 500 surging by nearly 1% each in the early trade. The tensions in the Middle East took a whole new intense turn when the US entered the field and bombed three of Iran's nuclear sites, amidst the Islamic Regime's conflict with Israel. US President Donald Trump warns of a far greater impact if Iran does not stop building nuclear weapons, while Ayatollah Khamenei vows to create more destruction to Israel and close one of the largest oil corridors in the world.
US Market:
The Dow Jones Industrial Average gained by 0.51% to hit an intraday high of 42,421.81, while the S&P 500 index crossed the 6,000 mark to hit an intraday high of 6,005.58, up by 0.63%.
Meanwhile, the tech-heavy index Nasdaq Composite outperformed with upside of 0.66% after hitting an intraday high of 19,576.04.
Among key market movers are --- Tesla shares that rallied more than 7% after the company rolled out its first driverless taxis over the weekend. Also, AMD jumped over 2% after receiving an upgrade from Melius Research. On the other hand, ExxonMobil and Chevron pared gains after WTI futures swung to trade firmly in the red, as per WTI.
On the other hand, US WTI crude oil futures declined to hit $73 a barrel, after the fear of supply disruption due to Middle East geopolitical crises faded.
Trading Economics data said, investors saw no immediate impact on physical oil flows following US strikes on Iranian nuclear facilities. While Israel escalated its attacks and Iran vowed retaliation, the intensity of Iran's responses appears to be subsiding. Despite the region accounting for a third of global crude production, shipments, including those through the critical Strait of Hormuz, remain unaffected. Iranian oil exports have shown signs of increasing since the conflict flared.
The market will assess the next move of Iran and its impact. Iranian Supreme Leader Ayatollah Ali Khamenei announced their promises to punish Israel after the US' latest strike but did not mention their action against the Trump-backed US.
Through their X handler, the government of the Islamic Regime said, "The U.S. attack on Iran's peaceful nuclear facilities is a blatant violation of the UN Charter and international law. Silence and inaction in the face of this aggression will have serious consequences for all."
In a press conference, Ismail Baghaei, Spokesperson for the Ministry of Foreign Affairs, said, "The philosophy of the United Nations is to prevent war and the resort to force, which has been easily trampled underfoot by America and the Zionist regime".
Meanwhile, Trump has warned IRAN of any retaliation which will be met with greater force than in the past days.
In the early hours of June 23, US President Donald Trump through his Truth Social said, "Monumental Damage was done to all Nuclear sites in Iran, as shown by satellite images. Obliteration is an accurate term! The white structure shown is deeply embedded into the rock, with even its roof well below ground level, and completely shielded from flame. The biggest damage took place far below ground level. Bullseye!!!"
Further, Trump warned that any retaliation by Iran against the United States Of America will be met with a force greater than what was witnessed during the weekend.
Right after the US strike, Iran's parliament voted to close the Strait of Hormuz on June 22. The decision is pending approval from the Islamic Republic's Supreme National Security Council.
Weekly Outlook Of the US Market:
According to the Charles Schwab report, a long cold war between the U.S. and Iran turned hot over the weekend and Wall Street reacted with a collective shrug. Crude oil (/CL) surrendered overnight gains and stocks recovered most of their earlier losses as the opening bell neared. While the market didn't seem overly fazed, the U.S. dollar and Treasuries gained, sometimes a sign of investors embracing perceived safety. Volatility also ticked up. Crude might ultimately tell today's tale. It's subdued for now but up around 20% over the last month.
However, even without Middle East worries, Wall Street faces a possibly volatile week.
Schwab's report highlighted Federal Reserve Chairman Jerome Powell is back in the spotlight tomorrow and Wednesday testifying to Congress. Friday features May Personal Consumption Expenditures (PCE) prices, the inflation data most closely followed by the Fed. Also, earnings pick up with KB Home (KBH), Nike (NKE), Micron (MU), and FedEx (FDX) on tap. It starts with KB Home later today, while commentary from FedEx could be scrutinized for potential insights on business and consumer sentiment.
Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research said, "Market momentum seems to be fading, judging from a decline in the relative strength index (RSI) and declining breadth. And 30- and 90-day hedging activity recently picked up, a sign that investors might see turbulence ahead. "Recent bullish momentum has transitioned into sideways consolidation."
Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on the article mentioned. Neither, the author, GoodReturns.Nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.
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