War, Inflation, and a Market That Kept Climbing

Week Ending June 12, 2026

Last week was a good reminder that markets do not always react to headlines in the most obvious way.

On paper, there was plenty for investors to worry about. Inflation moved higher again, tensions in the Middle East were still hanging over the market, and oil prices remained an important part of the story. Normally, that would have been enough to make for a difficult week.

But that is not how things played out.

Instead, stocks pushed higher as investors seemed more willing to focus on what could go right. Diplomatic headlines out of the Middle East helped ease some of the fear around energy markets, and by the end of the week, enthusiasm around SpaceX’s market debut added another boost to risk appetite. What stood out most to me was this: the market is still showing a strong willingness to reward optimism, even when the backdrop remains a little messy. 

Market Overview

Weekly Market Performance (June 8 to June 12, 2026)

• S&P 500: +0.65%
• Nasdaq Composite: +0.70%
• Dow Jones Industrial Average: +0.66%
• MSCI EAFE Index: +0.92%
• S&P/TSX Composite Index: about +1.5%

In the U.S., the major indexes finished the week higher, even though the path was not especially smooth. Leadership shifted around from day to day, with chip stocks helping early on, then other sectors such as materials, consumer discretionary, and real estate picking up some of the slack later in the week.

In Canada, the TSX also moved higher and outperformed many expected, rising roughly 1.5% from the prior Friday’s close to June 12. That strength came even as investors were still sorting through higher oil prices, a cautious central bank, and a mixed domestic growth picture. 

Why the Market Moved Higher

This week felt like a tug-of-war between inflation concerns and investor optimism.

Midweek, the May CPI report showed that U.S. inflation rose 4.2% year over year, the highest level in three years. On the surface, that was not ideal news. Higher energy prices were a big part of the increase, and anytime inflation starts moving the wrong way, markets have to think about whether interest rates may need to stay higher for longer. 

But the market found reasons not to panic.

For one thing, the inflation number largely matched expectations. And even though headline inflation was hot, investors seemed encouraged that the report did not come in worse than feared. At the same time, diplomatic updates around the Middle East helped calm some of the anxiety around oil and geopolitical risk. As those fears eased, buyers stepped back in. 

Then came SpaceX.

Its IPO became the biggest in history, raising $75 billion, and the stock finished its first day up 19.2% after opening above its IPO price. More than anything, I think SpaceX gave the market a fresh story to rally around. It fed back into the same theme we have seen so often lately: investors are still very willing to lean into innovation, growth, and anything tied to the next wave of technology enthusiasm.

Inflation Still Matters, But So Does Positioning

One of the more interesting things about this market is that bad news does not always stay bad news for very long.

Yes, inflation is still a problem. Yes, higher oil prices matter. And yes, central banks are still in a difficult position. But markets are also forward-looking, and last week felt like investors deciding that the inflation story, while still uncomfortable, was not enough on its own to break momentum.

To me, that is the key takeaway right now. Investors are not ignoring risk completely, but they are still very quick to buy back into the growth story when the headlines become even slightly less threatening.

What Canada Was Telling Us

Canada had its own important story last week.

The Bank of Canada held its policy rate at 2.25% on June 10, which was widely expected. What mattered more was the message around it. The Bank acknowledged that the conflict in the Middle East and higher energy prices are pushing inflation higher, but it also pointed out that Canadian growth has been soft. First-quarter GDP edged down 0.1%, and while employment rose in May, the broader labour market has been fairly flat this year, with unemployment still at 6.6%. 

That leaves Canada in a tricky spot. Inflation has been pushed up by energy, but the economy itself is not exactly running hot. So the Bank of Canada seems to be trying to look through the near-term oil shock without giving up its inflation fight. I think that helps explain why the TSX was able to move higher last week, but also why the backdrop still feels a little fragile. 

What the Week Really Meant

If I had to boil last week down into one simple idea, it would be this: the market is still willing to climb, even when the fundamentals are not perfectly clean.

That does not mean the risks are gone. Inflation is still too high. Oil can still create problems. Central banks are still being careful. But last week showed that investors are willing to keep leaning into optimism as long as the data is not dramatically worse than expected and the broader story still feels supportive.

That is a very resilient market mindset.

Looking Ahead

This week, attention will turn to retail sales, the Fed decision, and how policymakers respond to the recent inflation data.

If the Fed sounds more hawkish, markets could get a little less comfortable in a hurry. But if policymakers sound steady and investors keep believing that inflation pressures may settle back down, the market may continue to give the benefit of the doubt to the bullish case.

I also think it will be interesting to see whether the excitement around SpaceX has any spillover effect into the broader growth and AI trade. Sometimes one big event can help reinforce sentiment far beyond the stock itself.

If I had to sum up the setup in one sentence, it would be this: the market still wants to move higher, and right now optimism is winning the argument.

This Week: Key Economic Data

Monday, June 15th

• Industrial Production
• Capacity Utilization

Tuesday, June 16th

• Import Prices
• Housing Starts
• Building Permits

Wednesday, June 17th

• Retail Sales
• Pending Home Sales
• Home Builder Confidence Index
• Business Inventories
• FOMC Interest Rate Decision
• Fed Chair Warsh Press Conference

Thursday, June 18th

• Weekly Jobless Claims

Friday, June 19th

• The stock market will be closed for the Juneteenth holiday

This Week: Companies Reporting Earnings

Thursday, June 18th

• Accenture (ACN)

“We are what we repeatedly do. Excellence, then, is not an act, but a habit."
– Aristotle

Your mother’s brother’s only brother-in-law is taking a picture of you. How is he more closely related to you?

_{Last Week's Riddle: On a summer day, two fathers and two sons went fishing, and each one of them caught one fish. Why did they return home with just three fish?
Answer:Because it was a grandfather, a father, and a son who went fishing.}

A beautiful view of Hatley Castle which Joanne recently toured.

Footnotes And Sources

1. WSJ.com, June 12, 2026
2. Investing.com, June 12, 2026
3. CNBC.com, June 8, 2026
4. CNBC.com, June 9, 2026
5. WSJ.com, June 10, 2026
6. CNBC.com, June 11, 2026
7. CNBC.com, June 12, 2026
8. WSJ.com, June 10, 2026
9. IRS.gov, December 4, 2025
10. Allure.com, February 23, 2026

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