Daily Market Recap: Nasdaq Leads as Ceasefire Hopes Boost Stocks, VIX Drops Ahead of Fed Week

Markets kicked off the week with optimism as ceasefire hopes between Israel and Iran pushed equities higher, led by the Nasdaq. Despite intraday volatility and conflicting headlines, bulls held firm ahead of a critical week featuring retail sales, the FOMC decision, and options expiration. Volatility fell, hedge funds bought into the rally, and institutional players took profits — setting the stage for more fireworks ahead.

📈 Hope Rises, Vol Falls, and the Rally Rolls On

Monday’s session gave us a bit of everything: geopolitical drama, sector rotations, and the usual retail versus institutional tug-of-war. But when the dust settled, equities closed in the green, led by tech, with the Nasdaq taking top honors.

Here’s the full breakdown:

🧭 Market Drivers & Headlines

• Middle East Optimism: Markets caught a bid on hopes of a ceasefire between Israel and Iran. Iran is reportedly leaning on Gulf states to push for de-escalation, encouraging U.S. involvement.

• Conflicting Reports: A Wall Street Journal piece claimed a ceasefire is in motion. Later denials whipsawed markets, but bulls held their ground.

Key Macro Ahead: Traders are already bracing for a packed calendar:

1. Tuesday: Retail Sales
2. Wednesday: FOMC Meeting
3. Thursday: Market closed (Juneteenth)
4. Friday: Options expiration (OpEx)

💼 Index Performance

• Nasdaq: 🔼 Led the charge • S&P 500: 🔼 Broad strength, but still reliant on the Mag7 • Dow Jones: 🟰 Laggard of the day, finishing flat • S&P 493: 🔽 Sold off intraday after a strong open (Mag7 outperformance continues)

🔄 Sector Flows & Trading Behavior

• Cyclicals > Defensives: Strong rotation into industrials, financials, and consumer discretionary. • Tech Rip: Mega-cap tech stocks were bid hard again. • Retail Traders: Heavy activity in penny stocks, following the usual playbook: “buy the dip, hope for the rip.” • Buyback Watch: Corporate buybacks—one of the market’s biggest support mechanisms—are starting to cool as repurchase windows close.

🧠 Desk Insights: Goldman Sachs Flow Data

• Long-Onlys (LOs): Net sellers • Selling: Tech, Healthcare, Financials (>$100M in each) • Buying: Minimal, focused on defensive sectors • Hedge Funds (HFs): Net buyers • Demand up 10%, highest since January • Buying: Tech, Industrials, Fins, Cons Disc • Selling: Energy, Materials

Bottom line: Hedge funds are chasing the retail-led rally while institutions are taking profits.

📉 Volatility & Rates

• VIX: Fell sharply, erasing last week’s Middle East panic spike • Volatility Curve: Still showing elevated forward uncertainty due to macro catalysts ahead • Treasury Yields: Moved higher, with the long-end underperforming • Dollar: Slightly weaker, recovering from last week’s lows

🛢️ Commodities & Crypto

Oil: • Spiked on Sunday night during futures open • Faded on ceasefire rumors • Still volatile — the “Oil VIX” remains near post-Ukraine highs

Bitcoin: • Rallied sharply on hopes of peace in the Middle East • Fully erased losses from Israel’s strike last week

Gold: • Pulled back, giving up all of last week’s geopolitical gains

📊 Economic Data Check

• Empire State Manufacturing: • Headline: Dropped • Expectations Index: Soared to levels not seen since COVID bailouts

What Did GAR Do Today?

We sat pat with both our Options and Futures teams today. Much of the rally played out overnight and in a few select names, leaving limited intraday opportunity. With risk already on the board from open positions, and after Friday’s premium drawdown, today’s move helped recover some ground.

Rather than force trades, we chose to observe and reassess—especially with Retail Sales and the FOMC on deck this week. Patience is key, team.

🔮 Final Word from Carlos:

There’s always some noise. This week, it’s war headlines. Next week, maybe CPI or politics. But the playbook doesn’t change:

“It’s not the fear that moves markets — it’s liquidity and positioning.” Let them panic. We prepare. Let’s see what retail sales and Powell have for us next.

GAR Capital | Leading with Logic. Trading with Confidence.