Markets extended their rally for a third consecutive week, driven largely by a rapid de-escalation in Middle East tensions and a sharp reversal in energy prices.

U.S. equities extended their rally for a second straight week as investors responded favorably to the two-week U.S.-Iran ceasefire and the sharp pullback in crude prices. The S&P 500 gained 3.6%, the Nasdaq Composite surged 4.7%, and the Russell 2000 advanced 4.0%, underscoring a broad risk-on move across the market.

Global markets closed the week reflecting a growing tension between resilient economic activity and rising geopolitical and inflation risks.

Markets faced a volatile week as inflation concerns and geopolitical risks took center stage, pressuring both equities and fixed income. The Federal Reserve held rates steady as expected, but stronger-than-anticipated producer price data reinforced concerns that inflation may remain sticky, particularly as energy prices surge.

Geopolitics, energy, and data converged to deliver a turbulent week for markets, reminding investors that risk is rarely linear.

Volatility returned to global markets last week as a mix of geopolitical tension, inflation surprises, and shifting policy signals kept investors on edge.

Economic data last week painted a mixed picture. ISM manufacturing moved back into expansion, services held steady, and consumer sentiment improved slightly, even as weaker job openings and claims data suggested labor market cooling. The delayed January employment report, paused by a brief government shutdown, will soon offer additional clarity.

The Federal Reserve kept short-term interest rates unchanged this week, signaling patience amid mixed U.S. economic data. Durable goods orders and housing prices edged higher, while consumer confidence slipped and producer prices rose faster than expected—reminding investors that inflation still lingers.

In a week where geopolitics collided with markets, U.S. equities closed mixed after a volatile stretch dominated by President Trump’s pursuit of Greenland and its potential implications for trade relations. The S&P 500 fell 0.4%, marking a second straight weekly decline despite remaining up 1% month-to-date.