Weekly Update

Global Tensions

📈 Volatility Continues as Markets Balance AI Fears and Global Tensions

Last week was another volatile one for stocks. Markets swung between gains and losses as investors reacted to AI concerns, inflation data, and rising geopolitical tensions.

By the end of the week, the S&P 500 finished down just under -.5% but it’s still up slightly for the year.

Much of the back-and-forth trading was driven by continued anxiety around artificial intelligence investments and whether mega-cap tech companies can maintain their rapid growth. At the same time, hotter-than-expected inflation data added pressure later in the week.

Over the weekend, the U.S. and Israel launched a large-scale strike on Iran, which added another layer of uncertainty heading into this week. As expected, oil and gold jumped higher while stock futures pulled back.

The big picture? Markets are dealing with multiple uncertainties at once, but so far, trading ranges are holding.

💹 Rates, Dollar & Commodities

Interest rates moved lower last week, with the 10-year Treasury yield slipping below 4.00% for the first time in several months. Normally, falling yields support stocks, but this time the drop appears tied more to safety buying amid geopolitical concerns and stress in parts of the private credit market.

The U.S. dollar was relatively steady overall and commodities were generally stronger.

Oil surged, especially after the weekend escalation in Iran, with prices rising over 7% at one point as markets priced in higher geopolitical risk. Gold climbed about 3%, continuing its strong uptrend as investors looked for safety.

The key question now is whether oil prices stay elevated. If the conflict remains limited, energy prices may stabilize. A broader escalation would likely keep pressure on oil and add volatility to stocks and interest rate markets.

Source: Stockcharts.com

🔎 Takeaway

The economy itself still looks solid. Jobless claims remain low, and overall growth is steady. However, inflation remains elevated. Last week’s producer price index (PPI) came in hotter than expected, which could delay potential summer rate cuts. Right now, the main forces driving markets (AI optimism, stable economic growth, a balanced labor market, continued consumer and business spending, and expectations of a Federal Reserve rate cut) remain largely intact with a few challenges.

The new Iran conflict adds uncertainty, and for now, an imminent flight to safety, but unless it expands significantly or causes a lasting spike in oil prices (which would be an inflationary pressure), it may not change the longer-term outlook for stocks.

Bottom line: volatility is elevated, but the overall economic foundation remains intact.

🔭 This Week – What Matters for Markets

This is an important economic week that will likely be overshadowed by Operation Epic Fury news coming from the Middle East.

Investors will be watching:

• ISM Manufacturing (Monday)
• ISM Services (Thursday)

• Challenger Job Cuts (Thursday)
• The monthly Jobs Report (Friday)
• Retail Sales (Friday)

The market wants to see “Goldilocks” data — strong enough to show the economy is healthy, but not so strong that it pushes the Federal Reserve to delay rate cuts further.

If job growth remains steady and spending holds up, that would reinforce the idea that the economy is still expanding at a sustainable pace.

🌐 Broad Overview

The market currently feels like it’s in a tug-of-war.

On one side, the economy remains stable. Employment is healthy, growth is solid, and businesses are still investing — especially in AI and technology infrastructure.

On the other side, investors are nervous about inflation staying elevated, interest rates remaining higher for longer, and geopolitical risks continue expanding.

Technically, the broader trend is still positive, but volatility has picked up, and conviction is lower than earlier this year.

As long as the economy stays steady and oil prices don’t surge dramatically higher for a prolonged period, the bigger picture remains constructive, though short-term swings are likely to continue.

If you have any questions about your portfolio or the market outlook, please contact your CIAS Investment Adviser Representative.