Stocks closed solidly higher yesterday with all of the major indexes in the green by roughly 1%.

Futures on Sunday evening (and Monday morning) were modestly lower after it was reported that the U.S. struck Iran's nuclear facilities on Saturday.

President Trump had warned Iran from retaliating against the U.S. and its allies, or face additional strikes on Iran's other targets.

Nevertheless, Iran launched more missiles at Israel.

But the question of whether Iran would retaliate against the U.S. was left open.

Additionally, Iran had threatened to close the Strait of Hormuz (where roughly 20% of the world's oil travels thru), which could spike energy prices.

Pivot to Monday afternoon, and the strait was still open (energy prices tanked more than -8% as a result).

Moreover, Iran sent missiles to Qatar's U.S. military base, but those missiles were shot down with no injuries or casualties. And with it becoming known that Iran gave the U.S. a heads up (in an apparent effort to minimize or prevent harm, and likely to not provoke retaliation from the U.S.), stocks surged on the news.

It is unclear whether this is the extent of Iran's response to Saturday's strike. Or if there will be more, whether thru conventional means, or unconventional means.

But for now, the markets, and the world, have breathed a sigh of relief.

And stocks were able to focus on the fundamentals of the market, and the economy, which are quite supportive.

Last week's FOMC meeting, for example, where the Fed left interest rates unchanged for the fourth meeting in a row, had Fed Chair Jerome Powell say that "despite elevated uncertainty, the economy is in a solid position, the unemployment rate remains low, and the labor market is at or near maximum employment.?

All bullish comments.

Additionally, the Fed's SEP (Summary of Economic Projections), forecasts full-year GDP at 1.4% for 2025, and 1.6% for 2026. (No recession.)

The 4.2% unemployment rate is seen as being "broadly in balance and consistent with maximum employment." While the Fed does see an increase in the unemployment rate for all of 2025 to 4.5%, that's still historically pretty low. They also see it staying at that rate for 2026 as well.

They increased their PCE inflation estimates, currently at 2.3% y/y (2.6% for core, i.e., ex-food & energy), to tick up to 3% over the rest of the year, but then go back down to 2.4% for 2026, and 2.1% for 2027.

And they are still calling for 2 rate cuts this year (which shows the Fed sees the potential uptick in inflation later this year as being modest). With the Fed Funds rate at a midpoint of 4.38%, they expect rates to fall to 3.9% by year's end (presumably 2, quarter-point rate cuts). They are also projecting rates to fall to 3.6% in 2026 (1 rate cut), and 3.4% in 2027 (1 rate cut).

We'll get another look at inflation on Friday, 6/27, with the Personal Consumption Expenditures (PCE) index (which is the Fed's preferred inflation gauge).

In the meantime, the markets will be monitoring the events in the Middle East.

And looking for any new trade deal news.

Good news in either of these could help stocks eclipse their all-time highs (the S&P and Nasdaq are just 1.94% and 2.69% away, respectively), and begin their next leg up.

See you tomorrow,