Market Update: Stocks Rebound, Uranium and Chipmakers Rally, Oil and Gold in Focus Amid Middle East Tensions

• Early Tuesday US stock futures edged lower as initial optimism over easing Israel-Iran tensions faded, with weak US retail sales and caution ahead of Wednesday's Fed decision weighing on sentiment.
• Monday saw US stocks rally (S&P +0.94%, Nasdaq +1.52%) as reports that Iran was seeking a ceasefire helped ease geopolitical fears and oil prices, sparking a rotation back into tech.
• Monday's rally was broad, with all "Magnificent Seven" members gaining and semiconductor ETFs climbing over 2%.
• Notable premarket movers Tuesday included Solar stocks (Enphase -20%, Sunrun -36%) plunging after a Senate bill proposed cutting renewable energy incentives. Verve Therapeutics (+77%) soared on its acquisition by Eli Lilly. Microsoft (-1%) fell on reports of tensions with OpenAI. T-Mobile (-4.4%) dipped after a large share sale by Softbank.
• The Israel-Iran conflict continued with reports of attacks on energy infrastructure. President Trump called for an evacuation of Tehran, and G7 leaders issued a joint statement condemning Iran.
• Key economic data showed US retail sales fell by a worse-than-expected 0.9% in May, signaling consumer caution. The Bank of Japan held interest rates steady.
• Company news was dominated by a sharp sell-off in solar stocks after a Senate bill proposed phasing out renewable energy incentives. In contrast, uranium stocks rallied on a large physical purchase announcement by Sprott.
• Global markets Tuesday saw Europe fall to a three-week low on renewed caution. Asia closed mixed, with Japan gaining after its central bank meeting while China and Hong Kong were subdued.
• US Treasury yields declined Tuesday morning (10-year around 4.417%) as weak retail sales data and geopolitical jitters spurred a flight to safety.
• Gold held steady Tuesday amid geopolitical uncertainty. Oil prices jumped over 2% as renewed Israel-Iran hostilities and Trump's Tehran evacuation call reignited supply fears. Bitcoin slipped as risk sentiment faded.
• Market sentiment turned cautious again Tuesday due to renewed Middle East hostilities and weak US retail sales. All eyes are now on the Federal Reserve's policy decision on Wednesday.

U.S. equities rose on Monday as geopolitical tensions showed signs of easing. Reports that Iran is seeking a ceasefire with Israel helped calm investor nerves after last week’s sharp sell-off. Tehran is said to have reached out to several nations, urging them to press U.S. President Donald Trump to call for an Israeli halt to its strikes. That move fueled hopes that the conflict could remain contained, which in turn supported risk appetite. Oil prices, which had surged on fears of supply disruption, also moderated — further helping sentiment.

However, optimism faded somewhat heading into Tuesday. Stock futures dipped as investors remained on edge, monitoring continued developments in the Middle East. The release of weaker-than-expected manufacturing data on Monday morning added to caution. Investors are also bracing for Wednesday’s Federal Reserve policy decision, where the central bank is expected to provide critical clues on interest rates amid elevated geopolitical and inflation risks.

US Market Previous Day:

U.S. stocks rallied on Monday as easing oil prices helped improve risk appetite, prompting investors to rotate back into technology and growth names. The Dow Jones Industrial Average rose 317.30 points, or 0.75%, to close at 42,515.09. The S&P 500 advanced 0.94% to finish at 6,033.11, while the Nasdaq Composite led gains, jumping 1.52% to settle at 19,701.21.

All members of the so-called “Magnificent Seven” traded higher. Tesla added more than 1%, and Meta Platforms climbed nearly 3% following news that advertising would be introduced on WhatsApp, boosting investor optimism over future monetization efforts. Palantir Technologies also rose close to 3% as the company continued to attract attention amid heightened geopolitical tensions, with its products seen as aligned with growing defense and intelligence needs.

Semiconductor stocks saw outsized gains, helping lift the broader market. The VanEck Semiconductor ETF (SMH) rose over 2%, while the iShares Semiconductor ETF (SOXX) jumped more than 3%, as traders bet on continued strength in chip demand despite recent headwinds from trade restrictions and geopolitical uncertainty. The rally in chips also reflected renewed enthusiasm following a broader market pullback last week.

US Futures in Red:

• Dow Jones Industrial Average futures declined by 0.52%
• S&P 500 futures showed losses of 0.47%
• Nasdaq Composite futures lead the pack with losses of 0.55%.

Biggest Premarket Movers

• Solar stocks: Companies in the solar sector were broadly battered after the Senate's version of President Trump’s tax bill included provisions that would phase out renewable energy incentives. Shares of Enphase Energy dropped 20%, while First Solar and Sunrun slid 16% and 36%, respectively. SolarEdge Technologies also pulled back 30%.
• Verve Therapeutics: Shares rallied 77% in premarket trading after the gene editing company agreed to be acquired by Eli Lilly. The deal is valued at $10.50 per share, representing a 67.5% premium to Verve's last closing price, with a total potential value of up to $1.3 billion. It is expected to close in the third quarter. Shares of Eli Lilly fell slightly on the news.
• Roku: The streaming stock popped 2%, continuing its positive momentum. The rise followed an upgrade to a "buy" rating from "hold" at Loop Capital Markets, which also increased its price target to $100 from $80. Roku had already gained 10% on Monday after announcing an exclusive advertising partnership with Amazon.
• Microsoft: Shares fell nearly 1% following a report from The Wall Street Journal, citing people familiar with the matter, that tensions between Microsoft and its key partner OpenAI over their AI collaboration have reached a boiling point.
• Lennar: Shares of the homebuilder rose 2.5% after reporting that its revenue for the fiscal second quarter came in stronger than expected. Lennar posted revenue of $8.38 billion, surpassing the FactSet consensus estimate of $8.18 billion.
• T-Mobile US: The telecommunication stock fell 4.4% after reports from Bloomberg and Reuters indicated that major shareholder Softbank had sold 21.5 million T-Mobile shares in an unregistered, overnight sale at a price of $224 each, raising approximately $4.8 billion.

Israel-Iran War Update

Geopolitical tensions in the Middle East escalated further on Monday, with fighting between Israel and Iran entering its fourth day. Both nations have increasingly targeted each other’s energy infrastructure, deepening concerns about the impact on global oil supplies and market stability. Iran has signaled it may shut the Strait of Hormuz, a critical chokepoint through which a significant portion of the world’s oil is shipped. Meanwhile, Israel claimed it had achieved “aerial superiority” over Iran, heightening the possibility of a protracted conflict.

Former President Donald Trump said Tuesday that his early departure from the Group of Seven summit was due to "much bigger" matters than negotiating a ceasefire, following his public call for immediate evacuation of Tehran. The conflict prompted a joint statement from G7 leaders reaffirming their support for Israel and pressing for a resolution to the crisis. The group condemned Iran as a destabilizing force in the region and reiterated its opposition to Iran acquiring nuclear weapons.

Key Economic Data/News:

On the economic front, U.S. retail sales fell sharply in May, highlighting growing consumer caution amid rising uncertainty. The Commerce Department reported a 0.9% decline in retail sales, worse than the 0.6% drop economists had expected. This followed a 0.1% decrease in April. Excluding automobiles, sales were also weaker than forecast, down 0.3% compared to the anticipated 0.1% gain. The data suggests consumer activity is being weighed down by geopolitical stress and concerns about future tariffs.

Elsewhere, the Bank of Japan left its key policy rate unchanged at 0.5%, as expected. The central bank also reaffirmed its plan to gradually reduce Japanese government bond purchases through March 2026, before slowing the pace further. The BOJ’s stance reflects a measured approach to tightening as it navigates a delicate post-deflationary recovery.

Earnings Season/Company News:

Uranium stocks surged Tuesday after Sprott announced a major physical uranium purchase, renewing investor interest in the sector. Uranium Energy Corp. jumped roughly 7%, while Centrus Energy gained nearly 5%. The Global X Uranium ETF rose more than 4%. Asset manager Canaccord Genuity Corp. will acquire 11.6 million units of the Sprott Physical Uranium Trust, valued at approximately $200 million. The proceeds will be used to buy physical uranium, adding momentum to the uranium market amid broader energy security concerns.

In contrast, solar stocks came under intense pressure following the U.S. Senate’s unveiling of its version of President Donald Trump’s spending bill. The bill retains cuts to renewable energy incentives, triggering a sharp selloff in clean energy names. Enphase Energy tumbled over 17% in premarket trading, First Solar fell around 12%, Sunrun dropped more than 27%, and SolarEdge Technologies plunged 22%. The proposed legislation would phase out tax credits for solar and wind energy by 2028 but retains incentives for nuclear, hydropower, and geothermal energy—dealing a blow to companies that had benefited from Biden-era climate initiatives.

Global Market Trends:

In Europe, the pan-European Stoxx 600 slipped 0.8%, touching its lowest level in more than three weeks. This move came after a brief respite on Monday when markets had brushed off some of the geopolitical risks emanating from the Middle East. The downturn reflected growing caution as global investors digest potential ramifications of an intensifying Israel-Iran conflict.

Asia-Pacific markets were mixed on Tuesday amid choppy trade, as regional investors grappled with the fallout from President Trump’s call for an evacuation of Tehran and his early departure from the G7 summit. Japan’s Nikkei 225 rose 0.59% to 38,536.74, with the broader Topix up 0.35% after the Bank of Japan left rates unchanged at 0.5%. South Korea’s Kospi eked out a 0.12% gain, but the Kosdaq dipped 0.21%. China’s CSI 300 index closed flat at 3,870.38, while the Hang Seng Index in Hong Kong fell 0.34% to 23,980.30. Australia’s S&P/ASX 200 ended the day unchanged at 8,541.30.

Debt Market:

In the bond market, U.S. Treasury yields fell as geopolitical anxiety deepened. The yield on the benchmark 10-year Treasury dropped more than 3 basis points to 4.417%, while the 2-year yield declined 3 basis points to 3.939%. Investors appeared to seek safe-haven assets as uncertainty surrounding Middle East tensions clouded the global outlook.

Commodities and Other Assets:

Gold prices held steady on Tuesday as investors remained fixated on developments in the Middle East and awaited cues from the upcoming Federal Reserve policy meeting. Despite the calm tone, gold retains a firm upward bias, remaining the asset of choice during times of heightened geopolitical risk. With spot prices up roughly 30% so far in 2025, gold has outperformed other classic safe havens such as the Japanese yen, Swiss franc, and U.S. Treasurys. This shift in investor preference reflects growing concerns around fiscal sustainability and the changing nature of geopolitical threats. However, Citi revised its short- and long-term gold forecasts downward, warning that prices could fall below $3,000 per ounce by late 2025 or early 2026 as investment demand weakens and the global growth outlook improves.

Oil prices surged over 2% on Tuesday as renewed hostilities between Israel and Iran reignited fears of supply disruptions. President Donald Trump's urgent call for a Tehran evacuation signaled a deepening crisis, following reports of explosions and heavy air defense fire in the Iranian capital. Israeli cities also came under renewed missile threats. The escalation cast doubt on Monday’s modest pullback in crude prices, which was driven by brief hopes of deescalation. With Iran being the third-largest oil producer within OPEC, any sustained disruption to its output could tighten global supply and lift prices further.

Bitcoin slipped Tuesday after gains in the previous session, as market sentiment turned fragile amid signs that the Israel-Iran conflict remains unresolved. Hopes of a ceasefire faded despite reports of Iran reaching out to regional intermediaries, and the crypto space remained under pressure ahead of the Federal Reserve meeting. President Trump’s warnings to Iran and continued military exchanges between Tehran and Jerusalem have made traders wary of risk assets. Bitcoin and other cryptocurrencies showed little reaction to the Bank of Japan’s decision to hold interest rates steady and its plan to slow bond tapering beginning next year.

Market Sentiment:

Overall, market sentiment remained cautious as traders evaluated the rapidly evolving Middle East crisis. While Iran’s outreach to countries like Saudi Arabia prompted some optimism on Monday, the tone turned more guarded by Tuesday amid renewed military activity. Fitch Ratings noted that the conflict’s spillover still appears manageable within Israel’s existing credit rating. Meanwhile, traders are now pricing in a near-certainty that the Federal Reserve will hold interest rates steady at its upcoming meeting, according to CME’s FedWatch tool. Trump’s calls for a rate cut are being increasingly overshadowed by rising oil prices, which could stoke inflation and reduce the likelihood of any near-term easing by the central bank.