Geopolitics overshadow economic issues! The escalation of US military airstrikes in Iraq highlights the ongoing conflict. What key points can we look forward to in the next week?

Last week, the US stock market fluctuated lower as investors continued to digest the impact of escalated conflict between Israel and Iran, while closely monitoring the potential impact of Trump's tariffs on the US economy. In the new week, GEO Group Inc is destined to become the main focus of the market. On June 22nd, Trump announced a military strike by the US military on three targets in Iran, marking the first direct US involvement since the escalation of tensions with Iran on June 13th. In his speech that night at the White House, Trump hinted that if "peace cannot be achieved quickly," the US would take further action. The ripple effects of the US involvement in this escalating conflict will likely dominate the market sentiment at the beginning of this week, and may overshadow the upcoming economic data and corporate earnings reports. Last week, the S&P 500 index fell by 0.15%, the Nasdaq Composite Index rose by 0.2%, and the Dow Jones Industrial Average remained relatively flat in the shortened trading week due to the holiday. In terms of economic data for the upcoming week, the core PCE price index, favored by the Federal Reserve as an inflation indicator, will be a focus. Manufacturing and services PMI, consumer confidence index, and the final GDP value for the first quarter will also be released. Federal Reserve Chairman Powell's semi-annual monetary policy hearing, scheduled for two days starting on Tuesday, will also be closely watched. In terms of corporate earnings, Carnival Corporation, FedEx Corporation, Micron Technology, Inc., and NIKE, Inc. Class B will be releasing quarterly earnings. GEO Group Inc: Risks and Market Resilience Despite the continued attention on the conflict with Iran over the past week, it has not yet had a significant impact on the market. However, the US military's weekend military action may change this situation. In a report to clients, Citigroup US strategist Scott Chronert wrote, "Stock market direction is crucially dependent on the trend of energy commodity prices." Data shows that since Israel launched the first missile attack on June 13th, the S&P 500 index has remained in a range-bound fluctuation. Since the outbreak of the conflict, international oil prices have risen by about 10%, with WTI crude oil futures around $75 per barrel on Friday. Nicholas Colas, co-founder of DataTrek Research, warned in a research report that a significant increase in oil prices could inhibit economic growth. Colas' research shows that from 1987 to 2019, WTI crude oil prices have typically doubled before an economic recession, implying a critical warning level of $120 per barrel, far above current levels. Colas believes that achieving such an increase would require "prolonged military conflict." Debate over rate cuts continues The June Federal Reserve meeting ended as expected with no change in interest rates, and the median forecast for a 50 basis point rate cut by the end of 2025 remained largely unchanged. However, the Summary of Economic Projections (SEP) showed that the Federal Reserve simultaneously raised inflation forecasts and lowered economic growth outlooks. Overall, strategists believe this implies that the US may be facing the risk of "stagflation" - a situation where economic growth slows down while inflation remains persistently above the 2% target. But this outcome has been widely discussed amid the volatility of tariff policy. With seven officials predicting no rate cuts this year and eight officials expecting two rate cuts, the debate over rising inflation or weakening labor market will likely dominate Federal Reserve policy decisions in the coming months. Powell said, "As the data is released, these differences should narrow." Inflation data preview On Friday, the May core PCE price index will be released, with market expectations for the annual rate to rise from 2.5% in April to 2.6%, while the monthly rate is expected to remain at 0.1%, in line with the previous value. Bank of America Corp economist Stephen Juneau wrote in a report to clients, "Overall, this is good news for the Federal Reserve, but it should not be over-interpreted given the uncertainty surrounding the inflation path due to tariff policy." New heights in the battle The S&P 500 index has been hovering near historical highs for several weeks, but has yet to break the closing record of 6,144.15 points set on February 19th. Research by Exhibit A co-founder Matt Cerminaro shows that the S&P 500 index tends to exhibit this characteristic when it approaches historical highs after a significant drop. Cerminaro analyzed each instance of the S&P 500 index rebounding from a 20% decline and reaching a historical high, and found that on average, the index takes over three months to reach a new high within 5% of the historical peak. Currently, the S&P 500 index has only returned to within 5% of its historical high since May 12th.