June marked the second consecutive month of strong gains for the stock market, offering encouraging signs for investors as equities continue to rebound from the sharp pullback in early April. Below are the June returns for the popular benchmarks that investors track (Data provided by Y-Charts & Commonwealth Financial Network):

S&P 500 Index: +5%
Dow Jones Industrial Average: +4.3%
Nasdaq Composite Index: +6.6%
Russell 2000 Index: +5.2%
S&P Target Risk Moderate: +2.25%

Despite a strong month for the market, June was not without moments of geopolitical tension. Early in the month, Israel carried out military operations in Iran, prompting retaliatory drone and missile strikes targeting Israeli military sites. The situation escalated further when the United States conducted airstrikes on three Iranian nuclear facilities over the weekend of June 21–22. Had investors been aware of these developments in advance, many might have expected a sharp market selloff in response to the escalating Middle East conflict. Yet, markets remained resilient.

In a surprising turn, U.S. stock indices rose roughly 1% the Monday following the airstrikes, and oil prices declined sharply. This market reaction suggests that, so far, critical infrastructure tied to oil production and transportation in the Middle East has remained untouched, helping to ease concerns over supply disruptions. A ceasefire agreement was reached on June 23rd, offering hope that the conflict can be contained before escalating further.

Equity markets have largely brushed off the recent geopolitical tensions and continued their recovery from the early second-quarter selloff. To us, this resilience reflects underlying market strength—even in the face of potentially severe geopolitical consequences—an encouraging signal for long-term investors.

At the onset of the conflict, oil prices initially surged as markets priced in the risk of supply disruptions with global implications. However, as mentioned earlier, the spike was short-lived. Oil prices have since retreated and are now trading below levels seen prior to Israel’s initial strike.

We’ve seen similar scenarios in the past where oil prices have spiked intraday only to reverse sharply by the close. The chart below highlights historical instances where crude oil rose by more than 3% during the day but finished down by more than 5%. In each case, the S&P 500 delivered positive returns six and twelve months later. While setting aside the humanitarian toll of such events, history suggests that markets have generally responded constructively in the aftermath of comparable geopolitical shocks.

The first half of July is usually relatively strong for stocks. However, it would not surprise us if stocks took some time to digest the gains from the past two months. With July 1st marking the official start of the second half of the year, new capital tends to flow into markets where investors want to deploy it.

It is also important to note that the Trump Administration’s 90-day tariff pause is set to end in the middle of next week. There have been a handful of trade deals since the pause, and negotiations are ongoing with several foreign countries.

As always, don’t hesitate to contact our team with any questions.