Stocks Surge as Tensions Ease

The SPY Trader

Fresh news and strategies for traders. SPY Trader episode #1259. Welcome back to Spy Trader, your goto podcast for navigating the financial markets! I'm your host, Captain Cashflow, and it's 6 pm on Monday, June 23rd, 2025, Pacific time. Let's dive into the day's action. The US stock market is showing some real resilience, ending the day mostly in the green despite a rollercoaster of geopolitical news. The S&P 500 Index is up nicely, around 0.7% to 0.96% today, bouncing back sharply after an earlier dip. The Dow Jones Industrial Average has climbed about 0.81% to 0.89%, and the Nasdaq Composite Index is also showing solid gains, up around 0.94%. Over the past month, all major indices have been on an upward trajectory, with the S&P 500 up over 2%, the Dow over 1.7%, and the Nasdaq nearly 3%. The big news moving the market today came from the Middle East. After US airstrikes on Iranian nuclear facilities over the weekend, we saw an Iranian missile launch towards US military bases in Qatar earlier today. The market took an initial dip, but then rallied hard, especially after President Trump announced a complete and total ceasefire between Iran and Israel. This news really eased market concerns, sending stocks soaring and oil prices tumbling. It seems investors are hopeful for deescalation. Speaking of the Fed, they held their policy interest rate steady at 4.25% to 4.50% at their June meeting, which was expected. However, they still project two rate cuts for 2025, with Fed Vice Chair Bowman even hinting at a cut as early as the next meeting if inflation stays contained. On the trade front, President Trump's new tariffs are definitely a factor, stirring up some economic uncertainties and potentially leading to renewed inflation. In companyspecific news, Tesla saw a huge jump, up around 10%, thanks to developments in robotaxis, which significantly boosted the Consumer Discretionary sector. Microsoft stock hit a fresh high, even as they plan job trims. Hims & Hers stock plunged after its partnership with the Wegovy parent company ended. Kroger plans to close 60 stores, while Texas Instruments is investing 60 billion dollars in the US for domestic manufacturing. Uber is expanding its AI solutions, and Aflac reported a cybercrime group accessed customer data. Now, for the bigger economic picture: Real GDP actually decreased by 0.2% in the first quarter of 2025, mainly due to increased imports and decreased government spending, though investment, consumer spending, and exports did rise. Inflation is still a bit stubborn, rising to 2.4% annually through May, remaining above the Fed's 2% target. Core inflation, which excludes food and energy, held steady at 2.8%. Shelter costs were a big driver here. The new tariffs are expected to push inflation higher, possibly to 3.3% by yearend. The job market remains decent, with nonfarm payrolls up by 139,000 in May, and unemployment holding steady at 4.2%. Wages are up too, but labor market momentum is expected to slow down due to the 'tariff shock.' So, what does all this mean for your portfolio? The market's quick bounce back today suggests a belief that the worst of the Middle East tensions might be winding down, unwinding some of that risk premium we saw earlier. The strength in Consumer Discretionary, led by Tesla, and Tech indicates a focus on innovation and growth, while the drop in Energy stocks suggests the market doesn't expect major oil supply disruptions. The Fed's steady hand on interest rates, with promises of future cuts, offers some clarity, but inflation and tariffs are still wild cards. Here are some concrete recommendations: First, keep a very close eye on geopolitical developments. While the market shrugged off today's events, things can change quickly. Second, consider focusing on quality growth stocks in Consumer Discretionary and Technology. Companies with strong fundamentals and AI integration, like Tesla, are showing real momentum. Third, if you're heavily invested in Energy, it's worth reevaluating your exposure given the recent sharp decline in oil prices and the market's changing perception of risk. Fourth, prepare for potential Fed rate cuts, but with caution. These could boost growth stocks, but remember that the timing and number of cuts can change if inflation proves stickier or the economy surprises us. Fifth, assess how the new tariffs might impact your specific holdings, especially companies with complex global supply chains. Sixth, always, always diversify your portfolio and practice good risk management. In this uncertain environment, broad diversification across sectors and asset classes is key. Finally, if macroeconomic headwinds intensify, consider increasing your exposure to defensive sectors like Consumer Staples and Utilities, which tend to be more stable during economic slowdowns. Remember, this analysis is for informational purposes only and doesn't constitute financial advice. Always do your own research and consult with a qualified financial advisor before making any investment decisions. That's all for this episode of Spy Trader. Until next time, stay smart and keep those portfolios growing!