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This Week’s Market Forecast… 📊

The market enters this week on edge following Israel's attack on Iran late Thursday night. The strike occurred amid weeks of growing speculation regarding potential nuclear programs developing within Iran.

Oil prices surged roughly 10% on Friday due to heightened geopolitical tensions, leading equity markets to decline broadly. The S&P 500 and Nasdaq both fell by over 1%, while the Dow Jones declined by more than 2%. Treasury yields and the U.S. Dollar also increased.

This week, market attention will remain closely fixed on geopolitical developments in the Middle East. Due to the region’s significant influence on global oil markets, this issue will be a major market-moving factor.

Oil prices are among the most significant drivers of inflation. Recent months have seen inflation ease primarily due to falling oil prices. However, this sudden spike in oil prices following the attack may introduce upward inflationary pressures in the coming weeks.

This concern was clearly reflected by the rise in Treasury yields. Yields had previously been trending downward following weak inflation reports earlier last week but abruptly increased on Friday as oil prices jumped.

Aside from geopolitical factors, investors will closely watch the Federal Reserve this week as their two-day meeting begins Tuesday. Fed Chair Powell will address the public on Wednesday, potentially offering clearer insights into the Fed’s outlook on interest rates for the remainder of the year. Additionally, the quarterly Fed dot plot will be released, showing individual Fed members' projections for interest rates, economic growth, and inflation.

Last week, I highlighted my expectation for markets to reach all-time highs in the near term. While I still see that scenario as possible, the recent events in the Middle East could keep markets unsettled temporarily. The broader setup for potential upside remains intact, but with new inflationary threats and increased geopolitical tensions, the market could remain range-bound between 5750 and 6050 for the foreseeable future.

As always, stay positive, get invested, and be optimistic.

Have a wonderful week!!

Top ETFs on our Radar… 📈

The iShares Expanded Tech-Software Sector ETF has performed exceptionally well this year. Software companies have shown strong performance as investors seek to identify the next big winner in AI.

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Thanks for reading and have a great week!

-Ryan

@Theinvestingauthority