It is a choppy day, as President Trump announced he is seriously considering attacking Iran sending the fear index (VIX) to the highs of the session and stocks lower.

The tensions are also causing oil to move higher once again.

However, the bump in oil prices and energy stocks seems relatively contained considering how under-owned the energy sector is among professional investors.

On that note, Energy (XLE) is the only sector in green territory. On the flip side, Health Care (XLV) is the laggard.

Domestics Stocks Gain Sentiment

Notably, investors are moving away from “risk off” positions like bonds and into “risk on” positions like stocks. The ratio of stocks to bonds has reached levels equivalent to those around the inauguration.

In addition, the earnings sentiment surrounding US stocks has surged above other geographies, despite many of them seeing surges as well.

Economic Data

Manufacturing output rose by 0.1% M/M in May compared to April’s decline of 0.5% and below estimates of a 0.2% rise.

Notable Points:

• Durable goods gained 0.4%
• Non-durable goods fell 0.2%
• Capacity utilization was unchanged at 76.7
• Motor vehicles and parts rose 4.9%
• Aerospace and transportation equipment increased by 1.1%
• Logging fell 0.8%

Industrial production fell 0.2% M/M in May after a 0.1% rise in April and missing expectations of a 0.1% rise. The decline is in part due to a 2.9% decrease in utilities output.

The National Association of Homebuilder (NAHB) Sentiment declined to 32 in June from 34 in May and missed consensus of 36. Notably, the report showed 37% of builders cutting prices in June, making it the highest percentage since NAHB started tracking data in 2022.

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