Morning in New York: Middle East truce turns stocks upward

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The Middle East conflict remains in the center of attention of the investment community. The day before, the situation changed dramatically: President Donald Trump unexpectedly announced a truce between Israel and Iran, emphasizing that the agreement was reached through US mediation. Earlier, the Armed Forces of the Islamic Republic fired missiles at the American base in Qatar, but this attack was rather symbolic: the missiles were intercepted and the personnel was evacuated in advance, so this strike did not cause damage. On the morning of June 24, Tehran officially agreed to a ceasefire, which is seen as a step toward a truce. At the same time, localized shelling of the territory of Israel continues. Nevertheless, the main risk for investors associated with the closure of the Strait of Hormuz, apparently, is not realized. Besides, serious damage to oil and gas infrastructure was avoided. Against this background, WTI oil corrected to the range of $65-67, leveling almost all the growth since June 11.

Continued trade negotiations between the US and the EU also remain in investors' focus, as the EU is pushing for a trade agreement modeled on a similar agreement with the UK. Expected "reciprocal" tariffs of 10% could be the basis for a compromise, but threats of a sharp increase in duties to 50% after July 9 add to the uncertainty.

The key macroeconomic event will be the publication of the June Consumer Confidence Index from the Conference Board (consensus: 99.8 points, previous value: 98 points). Another important event is the speech of Fed Chairman Jerome Powell in Congress, which will start on June 24 and continue on June 23. We do not expect any surprises: since the press conference following the FOMC meeting on June 18, there have been no significant reasons for changes in the regulator's rhetoric.

Futures on S&P 500 shows positive dynamics. For the upcoming session, we forecast an increased level of volatility with a positive balance of risks. We focus on S&P 500 movements in the range of 5980-6100 points (from -0.7% to +1.2% relative to the closing level of the previous session).

- Shares of Nektar Therapeutics (NKTR) soared 35% in the postmarket after announcing the release of key data from a study of an atopic dermatitis drug.

- Quotes for KB Home (KBH) declined in after-hours trading amid a revision to the company's full-year housing revenue guidance to $6.3-6.5 billion from $6.6-7 billion, although the company's quarterly earnings matched consensus.

- Shares of Chewy (CHWY) fell 2% after announcing a $1 billion share sale.

- AstraZeneca (AZN) and its partner Daiichi Sankyo have received approval from US regulators for Datroway to treat a specific type of lung cancer. This is the first approval for the use of the drug in this indication, which expands the therapeutic options.

Trades on June 23 on American stock exchanges ended in the green zone. S&P 500 rose by 0.96%, Nasdaq 100 rose by 1.06%, Dow Jones rose by 0.89%, Russell 2000 added 1.11%. Most of the "Magnificent Seven" stocks closed in the plus column. The exceptions were Alphabet (GOOGL) and Amazon (AMZN). Almost all sectors included in the broad market index ended the session in positive territory. Manufacturers of durable goods (XLY: +1.98%) were the leaders of growth. The sectoral exchange-traded fund was supported by the heavily weighted Tesla (TSLA), which jumped 8.2% after the pilot launch of its robot cab last weekend. The energy sector (XLE: -2.53%) was the only outsider amid the de-escalation of the Middle East conflict.

S&P Global's industrial business activity index (PMI) remained at 52 in June, contrary to forecasts of a decline, which corresponds to a 15-month high. Rising output, increased hiring and higher prices amid stronger domestic demand and inventory accumulation signaled a continued recovery. At the same time, secondary home sales rose 0.8% to 4.03 million despite high mortgage rates. Experts note that lower interest rates may boost the real estate market and support economic activity.

Deputy Chairman of the Board of Governors of the Federal Reserve System Michelle Bowman considers it appropriate to reduce the rate in July with stable or declining inflation and signs of weakening labor market. A similar position was expressed by the head of FRB Chicago Austan Goolsbee and member of the Board of Governors Christopher Waller. This has fueled expectations of monetary easing soon. Despite Powell's restrained tone, the media are increasingly discussing the disagreements in the Fed's leadership and the likely approach of a rate cut. Pressure from Trump is also raising questions about the central bank's independence.

- SpartanNash (SPTN: +50.6%)will be acquired by C&S Wholesale Grocers for $26.9 per share, or $1.77 billion in aggregate.The deal is expected to close at the end of the year.

- Shares of Northern Trust (NTRS: +8%) reacted positively to a report that Bank of New York Mellon (BK: -2.2%) is interested in merging with the company.

- Circle Internet (CRCL: +9.6%) will partner with Fiserv to launch a stackablecoin platform covering over 3k regional and community banks.

- Novo Nordisk (NVO: -5.49%) has ended its collaboration with Hims & Hers Health (HIMS: -34.6%). Its drug Wegovy will not be sold through the NovoCare pharmacy network.

- FactSet Research Systems (FDS: +3.5%) reported quarterly revenue slightly above expectations while accelerating organic ASV growth to 4.5%. The company reaffirmed full-year guidance and announced a $400 million share repurchase program.

This article was AI-translated and verified by a human editor