Stocks closed higher yesterday, erasing most, if not all, of Friday's loss following rising tensions between Israel and Iran.

Last Thursday, it was reported that Israel launched a strike on Iran's nuclear and ballistic programs. Iran responded with a missile attack on Israel. Since then, the two countries have been striking each other. That carried on throughout the weekend and yesterday.

There's a glimmer of hope that Iran is open to negotiating an end to the hostilities. But no word on when that will happen or under what conditions.

The biggest fear is what happens if the U.S. gets dragged into a regional war. For now, that does not look to be the case.

Absent that, it should be noted that geopolitical events (Russia/Ukraine war, Israel vs. Hamas, the bombing of Houthi rebels in Yemen, and the overthrow of Assad's Syrian regime) have all had a limited, if any, impact on the markets. Short-term volatility is usually the immediate byproduct. Especially if it moves the price of oil. But there has been no lasting market impact from any of the above.

Aside from the Middle East tensions, the market was energized last week by two more better-than-expected inflation reports that showed inflation continuing to ease, defying worries that it would rise due to increased tariffs.

Prior to that, the market got a boost from another better-than-expected employment report.

And, of course, the market was cheering all of the positive developments conserving the tariff pause, the signed trade deal with the U.K., the framework agreement with China, and the negotiation progress being made with many of our largest trading partners.

While more deals are expected to be announced in the coming weeks, it was encouraging to Treasury Secretary Scott Bessent say that the U.S. has 18 "important trading partners," and that the Administration is "working toward deals with those countries," while also adding that White House was open to extending the 90-day pause on reciprocal tariffs to those who have shown "good faith" in ongoing trade negotiations.

The market still has the regional tensions to contend with. But assuming it can be contained, history suggests it should not negatively impact the markets in the long-run.

If so, the market can get back to its winning ways given the bullish news on inflation, jobs, trade, not to mention another better-than-expected earnings season.

See you tomorrow,