After more than ten days of conflict, signs of easing tensions have emerged in the Middle East.
On June 23 (ET), U.S. President Donald Trump posted on social media that a ceasefire between Israel and Iran would begin in approximately
six hours, at midnight ET on June 24. The agreement includes two 12-hour ceasefire periods, with Iran initiating the first 12-hour pause,
followed by Israel initiating the second. After 24 hours, the war would be officially declared over. According to Iran’s Fars News Agency on
June 24 (local time), following Iran’s latest missile strike that caused Israeli casualties, the ceasefire took effect at 7:30 a.m. Tehran time and
7:00 a.m. Israeli time.
Since June 5, 2025, the S&P 500 Index has experienced notable volatility, particularly as heightened Middle East tensions drove demand for
safe-haven assets, with both gold and oil prices rising and the S&P 500 remaining in a choppy consolidation phase. Following the ceasefire
announcement, market anxiety eased. On Monday, the S&P 500 rebounded 0.96%, holding above the 6,000-point level.
Source: TradingView
A Tentative Recovery
The S&P 500’s performance in 2025 reflects the multiple challenges facing the market. After falling into bear market territory with a 21.4%
decline from mid-February to early April, the index rebounded on the back of stronger corporate earnings and optimism over a potential
easing of U.S. tariff policies. However, renewed volatility emerged in June amid rising tensions in the Middle East, with the index posting
back-to-back weekly losses.
At present, the S&P 500 is trading in a narrow range. On June 20, the intraday low was 5,952.56 and the high reached 6,018.20, showing that
the index remains in consolidation near the psychologically important 6,000 level.
Source: TradingView
The ceasefire agreement between Israel and Iran is set to take effect on June 24, 2025, offering some short-term relief. Announced by
President Trump, the deal includes two 12-hour ceasefire phases, with hostilities expected to formally end within 24 hours. Following the
news, S&P 500 futures rose 0.8% to 6,127 on Tuesday, June 24, reflecting improved market sentiment.
Still, the market remains highly sensitive to geopolitical developments. The VIX Volatility Index has eased from a recent high of 22.00 to 19,
suggesting that while investor caution has moderated, it remains elevated.
Source: TradingView
Economic Signals
Recent economic data has been mixed, impacting the performance of the S&P 500.
The S&P Global U.S. Manufacturing PMI held steady at 52 in June, matching May’s 15-month high and surpassing expectations of 51. Driven
by strong new orders and accelerating employment growth, factory output expanded for the first time in four months. However, input and
output prices rose to their highest levels since July 2022, reflecting cost pressures—likely tariff-related—being passed on to consumers.
Source: S&P Global
Chris Williamson, Chief Business Economist at S&P Global, noted that while domestic demand and inventory restocking have supported
manufacturing, price increases driven by tariffs could eventually suppress demand, potentially limiting further gains.
Meanwhile, the core PCE inflation rate came in at 2.6% in May, the lowest in over three years, but still above the Federal Reserve’s 2%
target. The Fed held interest rates steady at 4.25%-4.50% in June and maintained its projection of two 25-basis-point rate cuts in 2025.
However, its updated forecasts—including higher inflation (raised from 2.7% to 3.0%), higher unemployment (from 4.4% to 4.5%), and
lower GDP growth (from 1.7% to 1.4%)—suggest rising risks of stagflation.
Source: Trading Economics
Fed Chair Jerome Powell is scheduled to deliver key testimony on June 24 and 25, and markets are closely watching for any signals on the
timing of rate cuts. Recently, dovish comments from Fed Governor Michelle Bowman have reinforced expectations for easing. She said that
a July rate cut would be on the table if inflation shows signs of softening or if the labor market weakens. This suggests that while a
near-term policy shift still requires more supportive data, the market is increasingly pricing in rate cuts in the second half of the year.
Technical Analysis
From a technical standpoint, the S&P 500 Index continues to consolidate around the 6,000 level, without a decisive breakout. Last week,
amid heightened tensions in the Middle East, the index posted a modest weekly decline of 0.15%. However, it remains above the early-May
gap-up level, forming a layer of technical support.
Support zone: The 5,960–6,000 range is acting as key support, bolstered by recent lows and the 20-day moving average at 5,966. A
decisive break below this area could open the door to further downside targets at 5,900 or even 5,855.
Source: TradingView
Resistance zone: The 6,100–6,147 region continues to pose overhead resistance. A breakout above this band could provide the setup for
further upside.
Source: TradingView
According to the latest AAII Investor Sentiment Survey, 33.2% of respondents are bullish while 41.4% are bearish, indicating a cautious but
not panic-driven market environment. The absence of clear bearish signals—such as a sharp break below 5,960—supports the case for
ongoing consolidation rather than a trend reversal.
Source: AAII
That said, while the ceasefire agreement has eased tensions in the short term, any violation of the deal could quickly reignite volatility.
If the ceasefire breaks down and escalates into a prolonged conflict, risk levels could surge. RBC Capital Markets warned that a prolonged
Israel-Iran conflict could push oil prices higher, drive the PCE inflation rate to 4%, and limit the Fed’s rate-cut capacity in 2025 to no more
than two moves. Under such a scenario, the S&P 500 could fall to the 4,800–5,200 range—representing a correction of up to 20%.
