Stocks closed lower yesterday on continued worries over the Israel/Iran conflict.

President Trump's early departure from the G7 meeting in Canada on Monday, to go back to the Situation Room in D.C., raised speculation on whether the U.S. will be getting deeper involved. His comments that "everyone should immediately evacuate Tehran," only furthered that speculation and suggested an attack (although unclear from whom).

Yesterday, Mr. Trump added that he was looking for Iran's "unconditional surrender" while still offering a path for de-escalation via negotiation.

In other news, yesterday's Retail Sales came in at -0.9% m/m vs. last month's -0.1% and views for -0.6%. Ex-Vehicles it was down -0.3% vs. last month's 0.0% and estimates for 0.2%. Ex-Vehicles & Gas it was down -0.1% vs. last month's 0.1%.

Industrial Production slipped -0.2% vs. last month's 0.1% and the consensus for 0.1%. Manufacturing Output rose 0.1% vs. last month's -0.5% and estimates for 0.1%. And the Capacity Utilization Rate came in at 77.4% vs. last month's 77.7% and expectations for the same.

And the Housing Market Index eased to 32 vs. last month's 34 and the consensus for 36.

The 2-day FOMC Meeting began yesterday.

Today we'll get the FOMC Announcement on rates at 2:00 PM ET, followed by the Fed Chair Press Conference at 2:30.

The expectation is for the Fed to hold rates steady. In fact, there is a 99.9% likelihood of that.

But Fed watchers will be looking for clues on what they might do at their next meeting on July 30^th, or the one after that on September 17^th. At the moment there's an 85.5% likelihood that they stand pat in July as well. But those odds shift in favor of a cut for September with a 63.2% likelihood. But nothing is set in stone and things can change.

In addition to the Announcement, you can be sure everyone will be listening intently on what Fed Chair Jerome Powell has to say at his Press Conference. Is the Fed still as concerned about inflation given the recent better-than-expected inflation reports? Are they as worried about tariffs? Are they still expecting 2 rate cuts this year? Moreover, do they have any comments about the recent Middle East tensions?

All of this and more is expected to be addressed this afternoon.

Note, we will have a shortened trading week as the markets will be closed on Thursday for Juneteenth.

Trading will resume as normal on Friday.

It's turning out to be a busy week, made that much busier given only four trading days this week.

See you on Friday,