U.S. equities advanced during the holiday-shortened week. Gains came primarily from strong semiconductor performance, resilient economic data, and optimism over the U.S.–Iran agreement. These factors outweighed a more cautious stance from the Federal Reserve. Key data: S&P 500 and Dow gained ~1%; NASDAQ rose 2.4%. Initial jobless claims declined to 226,000, reinforcing labor market stability. However, weaker housing activity and elevated inflation point to uneven growth. The Fed held rates at 3.50%–3.75%, explicitly communicating that it remains prepared to keep borrowing costs elevated while closely assessing the impact of ongoing energy-driven price pressures. The 10-year Treasury yield eased to ~4.46%. Investor enthusiasm for innovation persisted, as seen in SpaceX’s record-setting IPO, despite some late-week profit-taking. Notably, the U.S.–Iran MOU and reopening of the Strait of Hormuz alleviated immediate energy-market concerns, though the agreement remains fragile. Looking forward, continued economic growth, strong corporate profitability, and ongoing innovation support a constructive long-term outlook. Investors are benefiting from positive year-to-date returns across major markets.

U.S. & Global Economy

• US-Iran Peace Framework: The Week’s Dominant Story
• The most significant market-moving event was the signing of a memorandum of understanding between President Donald Trump and Iranian President Masoud Pezeshkian to end the war in the Middle East. Iran’s Supreme National Security Council confirmed on Sunday that the agreement had been finalized, with military operations on all fronts set to cease immediately.
• Key provisions of the deal include:
  • Reopening of the Strait of Hormuz to commercial shipping, with toll-free passage for 60 days and de-mining operations to be completed within 30 days
  • Iran’s commitment to never produce nuclear weapons
  • An “immediate and permanent” end to all military operations, including in Lebanon
  • At least $300 billion in economic development financing for Tehran from the US and regional partners
  • US sanctions waivers for Iranian oil exports
  • The deal was digitally signed on Wednesday, and the US lifted its blockade of Iran’s ports on Thursday, with oil tankers beginning to move freely through the Strait of Hormuz
  • Israel’s defense minister said the country would not withdraw from southern Lebanon, creating potential friction with the agreement’s terms. The entire Middle East remains a cauldron of uncertainty, but this MOU (Memorandum of Understanding) sets up the first meaningful positive development, and if Iran is serious about joining the world economy as a participant rather than the world’s largest purveyor of terrorism, we are cautiously optimistic about this resolution to the fighting.

Policy and Politics

• New Federal Reserve Chairman Kevin Warsh concluded his first FOMC meeting and the press conference that followed the meeting. The biggest takeaway from Chair Warsh’s press conference was the introduction of five new Federal Reserve task forces designed to review key areas of policy and operations. Warsh indicated that each group would include a combination of Fed personnel and external experts, with work beginning shortly and most recommendations expected before year-end. The areas of focus include:
• Federal Reserve communications. Warsh suggested the Fed may move toward fewer press conferences, emphasizing that public appearances should be reserved for meaningful developments rather than routine updates. He also expressed concern that financial markets have become overly dependent on interpreting Fed messaging, arguing that markets should serve as an independent source of information rather than simply reacting to policymakers.
• Balance sheet management. This group will evaluate the advantages and potential drawbacks of the current ample-reserves framework and review the overall structure and composition of the Fed’s balance sheet.
• Economic data modernization. Warsh questioned the Fed’s heavy reliance on traditional survey-based economic statistics and called for greater use of real-time and alternative data sources that may provide a timelier view of economic activity.
• Artificial intelligence, productivity, and employment. The task force will study how emerging technologies, particularly AI, are influencing economic growth, productivity, and labor markets. Warsh noted that while AI-related investment has already boosted demand through infrastructure spending such as data centers, the larger productivity gains may take considerably longer to materialize.
• Inflation and monetary policy framework. This review will review the underlying drivers of inflation and explore a broad range of approaches for maintaining price stability in an evolving economy. Warsh highlighted the increasingly uneven nature of inflation pressures, pointing out that housing-related trends appear relatively disinflationary even as AI-driven investment and other sectors continue to generate upward price pressures.

Overall, the announcement signals a willingness to challenge existing assumptions and reevaluate several core elements of Federal Reserve policy as the economy enters a period of rapid technological and structural change.

Markets have a busy week ahead, with investors balancing a packed calendar of earnings, economic data, and geopolitical headlines. Earnings reports from FedEx, Paychex, Darden Restaurants, and Micron Technology will offer a fresh look at consumer spending, labor market trends, and the strength of ongoing AI-related demand. On the economic front, the spotlight will be on the Fed’s preferred inflation measure, the Personal Consumption Expenditures Price Index, while comments from several Federal Reserve Board officials are likely to draw attention as investors look for more clues on how serious policymakers remain about keeping inflation in check. Overseas, the fragile peace agreement involving Iran will stay on investors’ radar, with J. D. Vance expressing cautious optimism following talks in Switzerland, while Donald Trump has continued to remind Iran that tougher military options remain available if tensions escalate. Even with those uncertainties in the background, the overall tone remains constructive, supported by easing oil prices, a consumer that continues to hold up well, and strong spending on AI infrastructure and data center expansion that continues to provide an important tailwind for growth. Please contact the team at Valley National Financial Advisors for any market-related questions.

Economic Numbers to Watch This Week

• U.S. Flash Manufacturing PMI for June 2026, prior 55.3
• U.S. Flash Services PMI for June 2026, prior 50.9
• U.S. New Home Sales for May 2026, prior 622K
• U.S. Durable Goods Orders for May 2026, prior 7.9%
• U.S. Third Estimate GDP for Q1 2026, prior 1.6%
• U.S. Initial Jobless Claims for Week Ended June 20, 2026, prior 226K
• U.S. Personal Income for May 2026, prior 0.0%
• U.S. Consumer Spending for May 2026, prior 0.5%
• U.S. PCE Price Index (M/M) for May 2026, prior 0.4%
• U.S. PCE Price Index (Y/Y) for May 2026, prior 3.8%
• U.S. Core PCE Price Index (M/M) for May 2026, prior 0.2%
• U.S. Core PCE Price Index (Y/Y) for May 2026, prior 3.3%
• U.S. Advance Economic Indicators Report for May 2026, prior -82.4B
• U.S. U of Michigan Final Consumer Sentiment Survey for June 2026, prior 44.8

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