U.S. and Israel executed a strategic operation in Iran that targeted top military commanders important insiders and leaders. The operation followed recent negotiations between the U.S. and Iran that included specific conditions to avoid military action. Those conditions included:

• Permanently end all uranium enrichment
• Accept strict limits on its ballistic missile program
• Completely halt support for regional proxy extremist groups

Iran's multi-decade supreme leader was killed in the operation. The event upended a regime that had dominated the country since 1989.

Political developments often influence markets because administrations pursue agendas that benefit certain industries and companies. Since the Trump administration took office initial policy support favored AI and advanced technology initiatives which supported momentum in that sector. This year market focus has shifted toward industrials and energy. Rising global defense budgets have increased interest in major defense contractors such as LMT NOC and BA. Energy markets have reacted to geopolitical moves and policy shifts involving Venezuela which benefited companies including CVX XOM and VLO. The recent operation has already pushed oil prices higher.

Market behavior to breaking news can be uneven. Initial knee-jerk declines can give way to rallies as conditions evolve. Many popular defense names are trading in extended conditions. Some small and mid-cap names are being monitored for follow-up market activity.

This week’s scheduled releases include S&P final U.S. manufacturing PMI ADP employment report Fed Beige Book and the U.S. unemployment rate. Job growth for the prior month is expected to be reported at 54,000. Unemployment remains near a historic low at 4.4%.

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