U.S. Stocks Surge 2% on Middle East Ceasefire, Fed Rate Cut Uncertain

U.S. stocks opened higher on the evening of June 24, following the announcement by U.S. President that a ceasefire agreement between Israel and Iran had taken effect. This development marked a significant easing of tensions in the Middle East, which had been a major concern for global markets. The ceasefire was announced by the U.S. President on Truth Social, emphasizing that the agreement was now in effect and urging all parties to comply. This announcement came after Israel confirmed the ceasefire decision, and the U.S. President reiterated that Israel would not attack Iran, reaffirming the ceasefire's validity.

The U.S. President also stated that all warplanes would return to their bases and that no one would be injured, claiming that the ceasefire would last forever. However, the conflict has not completely ended, as Israel accused Tehran of violating the ceasefire, and Iran stated that it remains on combat alert. The U.S. President later claimed that both Iran and Israel had violated the ceasefire agreement, expressing hope that tensions would ease and that recent violations would have no consequences.

Meanwhile, Federal Reserve Chairman Powell, in his testimony before Congress, stated that there was no urgency to lower interest rates. Powell emphasized that the Federal Reserve is waiting for clearer information on the economic impact of the U.S. President's tariff measures before considering any policy adjustments. He noted that the impact of tariffs would depend on various factors, including the final tariff levels, and that the current conditions allow for a wait-and-see approach regarding the economy's development path.

Powell's testimony comes at a critical time, as the White House is exerting strong pressure to lower interest rates. Within the Federal Reserve, there have been calls for a rate cut, with two officials recently expressing support for tightening policy as early as July. However, most Federal Reserve members, including Powell, have maintained a cautious stance on policy, leading the market to expect a rate cut to be more likely in September. At least 15 Fed officials will speak this week, and Powell will be questioned on Capitol Hill for two days, with topics expected to include U.S. tariff policy and the attack on Iran's nuclear facilities.

Economic data released by the Philadelphia Fed showed mixed results. The overall regional business activity index rose to -25.0, up from -41.9 the previous month. However, the June enterprise overall activity index fell to -17.3, down from -16.3 the previous month. The new orders index also fell to -20.1, down from -16.3 the previous month. The payment price index rose to 29.7, up from 29.6 the previous month, while the full-time employment index fell to -2.1, down from 11.3 the previous month. The future six-month regional business activity index rose to -8.2, up from -30.6 the previous month.

Economic data for the week includes U.S. core inflation and weekly initial jobless claims, as well as global manufacturing activity reports for June. These reports will provide further insights into the economic outlook and may influence market sentiment in the coming days. The easing of tensions in the Middle East and the Federal Reserve's cautious stance on interest rates are likely to remain key factors driving market movements in the near term.