Stock Market Today: Investors Undaunted After U.S. Air Strikes in Iran

Not exactly the reaction in the markets I'd have expected this morning!

As you've undoubtedly heard, over the weekend the U.S. attacked Iran's nuclear capabilities. It was called Operation Midnight Hammer. While President Trump had telegraphed that it would happen over the next two weeks, this type of entry into a war is rarely met with a yawn by the markets.

But that seems to be what we've got today.

Stock futures are trading slightly lower, bond futures are up modestly, and gold and oil are off by less than half a percent.

What gives?

Well, for one thing, investors appear to believe that the conflict will remain in that region and not spill over to the U.S. Israel has severely weakened Iran's ability to lead an offensive, and other Middle East countries have not stepped in to help the Islamic Republic. I guess it pays not to bully your neighbors and friends.

Whether you think this attack was a good thing or a bad thing, we will know only with the benefit of hindsight. Likely many years from now.

Until then all we have is the market in front of us.

And could that market be weakening?

Helene Meisler notes that stocks are little changed over the past month and that investor sentiment has changed. Bulls now outnumber bears, to the point that could indicate that the market is ready to turn lower. At the same time, market breadth, or the number of stocks going up vs. down, seems to be weakening.

While this isn't a sell signal, it bears attention.

Finally, could we be nearing the point where small caps could outperform?

* The S&P 500 has outperformed the Russell 2000 since March 2021
* Large-cap stocks tend to outperform during late-stage economic expansion
* Small-caps stocks tend to outperform during recessions and early-stage recoveries
* S&P 500 dividend index futures paint a more optimistic… pic.twitter.com/uDDVKdD5Df— Tobias Carlisle (@Greenbackd) June 22, 2025