S&P 500 broad market index futures surged
3.1% this week to 6,157 points, setting a new all-time high at 6,163 and
marking the strongest weekly performance since early May. The rally was sparked by geopolitical
de-escalation in the Middle East and reinforced by a surprising shift in tone
from the Federal Reserve. Momentum began building on Monday after Iran
signalled a peaceful response to the U.S. bombing of its nuclear facilities. Tehran had warned Qatar ahead of retaliatory missile strikes on a U.S.
base, and all missiles were intercepted with no casualties. Markets quickly
reversed Friday’s losses, with S&P 500 futures climbing 0.89% to 6,030
after U.S. President Donald Trump announced a ceasefire between Israel and
Iran. Confirmation of the truce by both parties on Tuesday pushed the index
further to 6,064, adding another 0.60%.
The rally gained further traction when Fed
Chair Jerome Powell delivered a surprisingly dovish testimony before Congress.
Despite acknowledging inflation risks linked to tariffs imposed by Trump,
Powell left the door open for interest rate cuts, saying there were “several
ways possible” for monetary policy. This view was echoed by traditionally
hawkish Fed officials Christopher Waller and Michelle Bowman, both Republicans,
who hinted at possible rate cuts as early as July. Their coordinated shift
suggested a notable softening in the Fed’s stance ahead of next month’s FOMC
meeting.
Markets took this as a clear green light. U.S. 10-year Treasury yields fell to 4.25% from
4.37%, while bet on a July quarter-point interest rates cut jumped to 20.7% from 14.5%. The S&P 500 decisively broke
above the 6,050 resistance level, which it retested by Tuesday’s close
confirming the breakout and opening the way toward the next major upside target
of 6,300–6,400 points.
Even a downward revision in Q1 GDP, from -0.2%
to -0.5%, failed to slow the rally. Adding to the positive sentiment, Trump
announced that the U.S. and China had reached a new trade agreement. This news
injected another dose of optimism into risk assets.
Currently, the index is consolidating near the
6,150–6,170 resistance band, a natural pause after a strong move. If bullish
momentum continues, this zone could shift higher to 6,250–6,270 next week.
Friday’s release of the May PCE price index is
expected to close the week on an inflationary note. Wall Street anticipates
headline PCE to rise to 2.3% YoY from 2.1%, and core PCE to 2.6% from 2.5%.
While deflationary surprises are still possible — as seen in the May CPI data —
the prevailing bullish trend is so strong that markets may overlook a mild
inflation overshoot.
Looking ahead, next
week brings a wave of macroeconomic catalysts, including PMI data, another
Powell testimony, and the June Nonfarm Payrolls
report. Traders are also beginning to price in potential
headwinds from unresolved U.S.–EU tariff talks, which could temporarily cap the
rally.
Institutional sentiment has clearly shifted.
After reporting $8.43 billion in net outflows last week, the SPDR S&P 500
ETF Trust (SPY) recorded inflows of $6.78 billion this week, not including
Thursday and Friday. This suggests large investors are now actively
participating in the rally toward the 6,300–6,400 range.
Technically, the S&P 500 has exited its
previous consolidation between 5,950–6,050 and is now advancing toward the
upper target. Once the 6,300–6,400 zone is reached, however, the risk of a
pullback will rise — and early signs of exhaustion are already appearing.
In commodity markets, Brent crude remains
fragile. Prices have pulled back to support at $67.00–69.00 per barrel. If this
level holds, another push toward $76.00–78.00 remains the base case. But a
confirmed break lower would expose Brent to further losses down to
$57.00–59.00.
Gold prices continue to weaken. The metal has
broken below support at $3,330–3,350 and now trades at $3,285. The next support
lies at $3,230–3,250. A daily close beneath that level would confirm a move
lower toward the $3,030–3,050 zone.
Meanwhile, the U.S. Dollar is weakening again.
Despite improved trade relations
between the U.S. and China, a factor that would typically support the dollar, renewed
criticism of Fed policy by President Trump is keeping pressure on the
Greenback. Technically, the EURUSD has broken above its
primary range of 1.14500–1.15500 and is pushing toward the 1.18000–1.19000
target. With current levels at
1.17140, the upside appears close, but entering at these levels carries
elevated risk.