CNBC

Lead Story

The artificial intelligence trade faced a global reckoning as the semiconductor sector headed for its worst month on record, but late-day market narratives pivoted sharply when Iran launched a surprise ballistic missile attack on U.S. forces in the Middle East. The abrupt end to a temporary ceasefire sent U.S. crude surging over 4% and left stock futures flat as investors braced for the geopolitical fallout.

Markets & Economics

The broader market experienced a stark rotation as the Dow Jones Industrial Average surged more than 500 points on solid blue-chip earnings, while the Nasdaq Composite logged its fifth consecutive losing session. The tech-heavy weakness was driven by a brutal semiconductor sell-off that began in Asia, where SK Hynix plunged 10% after its Q2 revenue and profit missed expectations despite record milestones. The contagion spread to U.S. chipmakers, with the SOX index tracking toward a historic monthly decline amid fears of AI “circular financing” and Chinese DUV breakthroughs. Meanwhile, bond markets and Fed funds futures are pricing in a likely rate hold, though Chairman Kevin Warsh faces a delicate press conference balancing the inflationary risks of surging oil and heavy tech capex.

Business & Earnings

Coca-Cola was a standout, popping roughly 5% after topping Q2 expectations and raising its full-year organic revenue forecast to 5% on the back of resilient global demand. Boeing shares advanced as the planemaker generated a surprise $631 million in positive free cash flow, softening the blow of a wider-than-expected loss driven by a $280 million charge on the Air Force One program. In the payments space, Visa announced it is cutting 7% of its workforce—about 2,600 jobs—to streamline operations and reinvest in growth areas as AI reshapes its internal workflows. Elsewhere, Johnson & Johnson struck a landmark $5.5 billion deal to resolve tens of thousands of ovarian cancer lawsuits tied to its talc products.

Investing & Commentary

Wall Street analysts are sounding the alarm on the AI infrastructure trade, with Jim Cramer explicitly warning investors using margin to sell data center stocks immediately and rotate into “stair-step” names like Costco and Walmart. Hyperscaler skepticism is peaking ahead of this week’s earnings, pushing Microsoft short interest to a decade high of 92 million shares as investors question the ROI on hundreds of billions in AI capex. Echoing the shift toward defensive positioning, Morgan Stanley advised buying high-quality, free-cash-flow generators with solid dividends, singling out Colgate-Palmolive and SLB.

Also Worth Watching

• Apple Touches $5 Trillion: Apple briefly hit a $5 trillion market cap, solidifying its lead over Nvidia as investors favor its capital-light AI strategy.
• Shein Faces FTC Probe: The fast-fashion giant disclosed an active Federal Trade Commission investigation into its U.S. business as it prepares for a Hong Kong IPO.
• PulteGroup CEO on the Housing Market: CEO Ryan Marshall discusses the resilience of the U.S. housing sector amid shifting mortgage rates.
• SpaceX Stock Slump Tests Insiders: SpaceX has shed $1.2 trillion in market value since June, setting up a volatile test as a major insider lockup period expires.