Weekly Market Review | 22.6.26 - 27.6.26

A week of balance between rates, geopolitics and technology

The new trading week begins with investors trying to understand whether markets can maintain their positive momentum, or whether interest rates, energy prices and geopolitical uncertainty are starting to weigh again on valuations. On one hand, technology and AI-related stocks continue to support the market, and risk appetite has not disappeared. On the other hand, bond yields, inflation concerns and Middle East uncertainty are keeping investors more cautious.

In the U.S., last week ended with a mixed picture. SPY, which tracks the S&P 500, traded around $746.7; QQQ, which tracks the Nasdaq 100, showed stronger relative momentum around $740.6; while DIA, which tracks the Dow Jones Industrial Average, was weaker. IWM, the Russell 2000 ETF, also showed some recovery, which may suggest an attempt by the market to broaden beyond mega-cap stocks.

The key event last week was the Federal Reserve’s decision to keep rates unchanged in a range of 3.5% to 3.75%. But the message was not especially dovish. The Fed continues to focus on inflation risk, and markets are no longer thinking only about rate cuts. They are also considering the possibility of additional tightening if the data remains too strong.

This week’s macro data will be especially important. Investors will focus on personal income and spending, durable goods orders and the PCE inflation data, which is the Fed’s preferred inflation measure. A hotter-than-expected PCE number could pressure both bonds and equities. A softer number could give growth stocks more breathing room.

In bonds, the market remains very sensitive. TLT, the long-term U.S. Treasury ETF, traded around $86.75. This part of the market continues to react sharply to changes in rate expectations, inflation and the U.S. fiscal outlook. Falling yields can support growth stocks, but any renewed jump in yields could pressure expensive technology names.

In commodities, oil remains one of the most important forces for markets. USO, the oil ETF, traded around $114.9. The Middle East remains a major driver of energy prices, with markets moving between hopes for stability and fears of renewed escalation. Reuters reported that investors have been closely watching developments around Iran, peace talks and the impact on oil prices and global sentiment.

Gold remains a defensive asset, but it is also moving with the dollar and bond yields. GLD traded around $387.1. When yields rise, gold tends to struggle. When geopolitical risk increases or yields fall, gold usually finds support. This week, gold will depend heavily on the combination of inflation data, the dollar and Middle East headlines.

In crypto, Bitcoin traded around $64.3K. The market remains highly sensitive to overall risk appetite. When growth stocks rise and the dollar weakens, Bitcoin usually benefits. When yields rise and investors become more defensive, crypto struggles to generate independent momentum.

In Israel, the picture is more complex. The Bank of Israel cut rates in May to 3.75%, supported by a stronger shekel, softer inflation and hopes for geopolitical easing. According to Reuters, annual inflation in May stood at 1.9%, within the official 1% to 3% target range, and markets are already watching the possibility of another rate cut at the upcoming July decision.

The Tel Aviv market appears to be in a short-term correction after a very strong annual run. The TA-125 fell on June 19 to around 4,082 points, down about 5.65% over the past month, but still almost 40% higher than a year earlier. That means the local market remains strong on a yearly basis, but in the short term it is more sensitive to profit-taking, the shekel, interest rates and geopolitical risk.

From a sector perspective, four areas deserve close attention this week. The first is technology and AI, which still lead the market but trade at elevated valuations. The second is financials, which may benefit from higher rates but could suffer if recession fears increase. The third is energy, which will continue reacting to Middle East headlines. The fourth is small and mid-cap stocks, because continued strength in IWM could signal healthier market breadth.

The bottom line for the week ahead: the market is not broken, but it is less relaxed. As long as technology holds up, yields do not spike and economic data does not surprise negatively, momentum can continue. But if inflation data comes in too hot, oil rises again, or the Fed sounds more hawkish, the market could quickly shift from positive momentum to a sharper correction.

For investors and traders, this is a week to avoid chasing stocks that have already run too far. The better approach is to look for names that hold support, build a base, show relative strength and break out in an orderly way with clear risk management.