Insights 
VT 
US stock markets have shown some upward movement since the start of the week, yet the bullish tendencies appear unconvincing. The Fed held its interest rate steady, indicating hesitation to ease monetary policy, despite expectations for two more rate cuts by year-end.
Fed Chairman Powell’s testimony before the US Congress maintained a cautious tone. However, some Fed policymakers suggest support for easing, which could influence financial conditions and equity markets if further signals emerge.
Impact Of Upcoming Economic Releases
Despite the Fed Chairman’s cautious stance, US stock markets ended positively on Tuesday. Upcoming US economic releases, including final Q1 GDP, May PCE rates, June’s ISM manufacturing PMI, and ADP figure, are expected to impact equities. The PCE rate’s indication of inflationary pressures could affect the market’s view of the Fed’s future actions.
A recent ceasefire in the Israel-Iran conflict, following US strikes on Iranian sites, has potential to improve market sentiment. If the ceasefire holds, riskier assets may gain support. Furthermore, NATO’s increased defence spending could positively impact defence industry shares.
In technical analysis, the S&P 500 remains within the 5925 support and 6140 resistance levels, suggesting a sideways motion. Narrow Bollinger Bands indicate low volatility; a break above 6140 resistance could imply a bullish trend, while a drop below 5925 may suggest a bearish outlook.
What the previous discussion tells us, quite plainly, is that equity markets may have moved mildly upwards, but the conviction behind that rise isn’t strong. While headlines might show green ticks and positive closes, the detail paints a more hesitant picture. Traders betting on a clear directional trend may be disappointed unless further clarity emerges.
Most of this uncertainty stems from policy signals—or rather, the lack of them. Powell kept interest rates unchanged, which was largely anticipated. But what made the market pause was not the decision itself, but the message surrounding it. He didn’t commit firmly to cuts, and his tone stayed subdued. This reinforces the growing view that policymakers, despite growing speculation, will not rush to ease. However, others within the Fed are leaning more openly toward cutting rates. That divergence in voices creates confusion across the board.
Challenges In Market Sentiment
Market participants generally dislike mixed messages. When one official sounds cautious and another signals flexibility, this picks apart any strong consensus and leaves traders unsure whether they’re managing risk or chasing it. We’ve been seeing this reflected in the cautious optimism—rallies that struggle to hold meaningful follow-through.
Now, looking ahead to the upcoming week, markets will be trying to interpret a crop of economic releases. We see final GDP data, inflation readings tied to personal consumption, manufacturing sentiment surveys, and private sector payrolls. Each of these will add weight to the broader question: is the Fed more likely to hold its stance, or will the data force a shift? If inflation appears sticky, traders will need to consider that rate cuts could be deferred deeper into the year. And that, in turn, would affect asset valuations—especially those priced around an easing cycle.
News from the Middle East has added another layer to the overall tone. The ceasefire announcement after US military strikes introduced a fresh risk-on trigger. If that truce proves durable, we could see continued support for asset classes typically seen as higher risk. Sentiment quickly pivots when there’s a perception that geopolitical pressure is easing. On the other hand, short-lived resolutions can flip optimism into renewed flight-to-safety.
Defence-linked equities may draw tailwinds from NATO’s planned increase in spending. That spending doesn’t turn into revenue overnight, but it does shape medium-term expectations for the defence sector. For now, it provides thematic justification for positioning in that sphere.
Chartists will likely be watching the S&P 500’s levels with increased focus in the coming days. The lower end near 5925 acts as a strong base in this current range-bound scenario, while 6140 forms resistance. These are actionable reference points. Should we move decisively beyond 6140, we may entertain the idea of sustained buying. If prices drop through the 5925 handle, that would be interpreted as a shift in market sentiment, and activity would likely accelerate in the opposite direction.
The presence of narrow Bollinger Bands is also noteworthy. It hints that we’re transitioning out of a period of low volatility. In times like this, volatility tends to expand—not remain still. Once volatility reemerges, price movements can be rapid and hard to catch. That means it is better to have parameters decided in advance, rather than trying to react later.
From where we stand, there are crosscurrents to deal with. Timely data and unexpected geopolitical events will likely determine short-term moves. But as of now, the signals being received still fall somewhere between reassurance and doubt.
