With the first half of 2025 in the books, it must come as a surprise to many that the S&P 500 and NASDAQ are each up 5% year-to-date(as of last Friday).
With the first half of 2025 in the books, it must come as a surprise to many of the bears that the S&P 500 and NASDAQ are each up 5% year-to-date (as of last Friday), and both indexes hit new highs also as of last Friday.
Part of last week’s market surge came after a ceasefire between Iran and Israel was announced on Tuesday, causing President Trump to label the recent conflict “The 12-Day War,” a reference to the 6-Day War of June 1967. As a result of this ceasefire, the price of oil quickly fell from $78 last Monday to $64 on Tuesday. Oil has stayed around $65 since then, as Iran’s threat to close the Strait of Hormuz is no longer being taken seriously. Although Iran still lobbed some missiles at Israel after the announcement, and Israel may do the same, this ceasefire is, at the very least, a huge reduction in the level of hostilities.
After the U.S. entered the conflict with a “bunker buster” bombing raid on June 21st, Iran announced on Monday that their Revolutionary Guard Corps fired six missiles at the U.S. base in Qatar. Another missile was apparently fired at another U.S. base in Iraq, but Iran gave the Trump Administration notice of these missile launches first, so President Trump thanked Iran on Truth Social for giving us advance notice.
I realize that the world is still full of dangers – and wars can promote indecision and fears of retaliatory strikes on U.S. embassies and military bases, fueling uncertainty – but we must remember that the U.S. is fortunate to be separated by two big oceans, so we do not have to fear retaliatory strikes as much as Israel.
Here are the most important developments recently and what they mean:
– Anytime the stock market makes a new high, profit taking ensues. Right now, it appears that the stock market is rotating. As an example, the quantum computing stocks that had been so hot a few weeks ago have settled down, but this in turn allowed the semiconductor industry to lead the way. I expect profit taking to persist in leading stocks like Palantir Technologies (PLTR), but as long as money is being reshuffled, there is nothing to worry about, since money is not leaving the stock market. The traditional pattern is that the stock market tends to rally into the 4th of July weekend, and some profit taking will be postponed until after the holiday.
