Peak inflation?

U.S. stocks rallied sharply in the first half of the year as strong earnings growth, solid revenue gains, and record profit margins supported new highs for the S&P 500 and Nasdaq.

The economic backdrop has also improved, with hiring, consumer spending, and manufacturing all holding up well, while June inflation cooled more than expected as energy prices eased.

That said, markets remain sensitive to renewed volatility from the Iran conflict and any rebound in oil prices, which could pressure inflation and complicate the Federal Reserve’s path.

For investors, the near-term outlook still favors resilient growth and moderating inflation, but policy uncertainty and geopolitics argue for staying selective and prepared for swings in sentiment.