Nasdaq, S&P, Dow closed higher as Middle East tensions continue and Fed rate decision looms

[Financial chart] Avalon_Studio/E+ via Getty Images Wall Street’s major market averages kicked off the week on a positive note as markets advanced on Monday, with the Nasdaq Composite setting the pace as investors appeared to look past escalating tensions between Israel and Iran. Contributing to the market's upward momentum were reports that Iran has has sent signals to Israel and the U.S. through Arab intermediaries as it looks to de-escalate the conflict [https://seekingalpha.com/news/4458405-iran-looks-to-de-escalate-conflict-with-israel-report] and resume talks over the nuclear deals. However, those claims were later challenged, as an Al Jazeera journalist refuted the Wall Street Journal’s report, stating that no such messages were transmitted by Iran. At the end of the trading day the the tech focused Nasdaq Composite (COMP:IND [https://seekingalpha.com/symbol/COMP:IND]) was the best performer as it closed higher by 1.5%.

At the same time, the benchmark S&P 500 (SP500 [https://seekingalpha.com/symbol/SP500]) advanced by 0.9%, and the blue-chip Dow (DJI [https://seekingalpha.com/symbol/DJI]) had climbed up by 0.7%, all signaling a broad-based rebound from Friday. “The week started with a relief risk-on rally due to the fact that Israel did not strike Iran's energy infrastructure designated for oil exports, which lowers the probability of on oil price spike, in addition to the rumors that Iran wants to return to negotiating table,” Seeking Alpha analyst Damir Tokic [https://seekingalpha.com/author/damir-tokic] stated. “The stock market rallied, led by big tech, and all retail favorite stocks spiked. In my opinion this is a premature move, and I would remain in safe havens, not only due to the geopolitical situation, but also as the net effect of all policies points to stagflation, which I expect the Fed to confirm this week,” Tokic added. From a sector-by-sector basis, seven of the 11 S&P segments closed out trading in positive territory as Communication Services led the way higher.

In reverse, Utilities had suffered the most and Energy also finshed lower as oil (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) moved down by 2.5%. Treasury yields inched up with the shorter-end U.S. 2 Year Treasury yield (US2Y [https://seekingalpha.com/symbol/US2Y]) higher by 2 basis points to 3.97%. The longer-end U.S. 10 Year Treasury yield (US10Y [https://seekingalpha.com/symbol/US10Y]) moved up 4 basis points to 4.45%.

"The ongoing exchange of missile strikes between Iran and Israel this weekend has not had a major impact on financial markets… Further market moves would be justified only if there were expectations of even more disruption to energy supplies or shipping lanes," UBS' Paul Donovan said. The economic calander was light on Monday with just the Empire State Manufacturing Index [https://seekingalpha.com/news/4458346-ny-empire-state-manufacturing-index-sinks-more-than-expected-as-orders-shipments-slide] sliding to -16.0 in June, which was weaker than the -7.0 consensus level. The main event for the week will be the Federal Reserve's monetary policy announcement and meeting. The Fed will announce the interest rate decision on Wednesday, followed by a press conference by Fed Chair Jerome Powell. It is widely believed that the FOMC will keep the rates unchanged.

"Powell's press conference is likely to emphasize uncertainty and a wait-and-see approach. The recent spike in oil will just add to all of this, even if recent inflation data has been better than expected," Deutsche Bank's Jim Reid said. As for stocks that were on the move, shares of Roku (ROKU [https://seekingalpha.com/symbol/ROKU]) popped up on Monday by 10.4% following the announcement [https://seekingalpha.com/news/4458220-amazon-ads-and-roku-partner-to-create-largest-authenticated-ctv-advertising-footprint] of a new integration with Amazon Ads (AMZN [https://seekingalpha.com/symbol/AMZN]). MORE ON MARKETS * Oppenheimer stays bullish on equities despite geopolitical tensions [https://seekingalpha.com/news/4458470-oppenheimer-stays-bullish-on-equities-despite-geopolitical-tensions] * Lockheed, Boeing tout possible roles in Trump’s $175B 'Golden Dome' missile shield [https://seekingalpha.com/news/4458577-lockheed-boeing-tout-possible-roles-in-trump-s-175b-golden-dome-missile-shield] * Iran reaches out to Arab intermediaries in bid to de-escalate conflict with Israel; crude oil sinks [https://seekingalpha.com/news/4458405-iran-looks-to-de-escalate-conflict-with-israel-report] * The Bubble - Contains The Collapse - Contains The Resurgence [https://seekingalpha.com/article/4795158-the-bubble-contains-the-collapse-contains-the-resurgence] * Why Stock Investors Shouldn't Bet On A Recession [https://seekingalpha.com/article/4795155-why-stock-investors-shouldnt-bet-on-a-recession]