CNBC

Lead Story

President Donald Trump’s sudden cancellation of a planned military strike on Iran, citing an imminent agreement over the “perimeters of a deal” to reopen the Strait of Hormuz and end the nuclear threat, sparked a steep drop in crude oil and fueled a sharp rally on Wall Street. This geopolitical de-escalation, coupled with OPEC+’s approved September production hike of 188,000 barrels per day, allowed investors to rotate back into equities ahead of critical economic data and a heavy earnings week.

Markets & Economics

The relief from geopolitical easing sent WTI crude tumbling 5.1% to settle at $80.34 per barrel and October Brent crude sliding 4.6% to $83.96, pulling the 10-year Treasury yield down slightly to 4.688%, though businesses still face supply chain friction from elevated fuel pump prices. In currency markets, Washington joined Tokyo in a rare coordinated foreign-exchange intervention to shore up the yen—the first such joint effort since 2011—propping the currency to 157.70 after it plumbed a 40-year low of 163.73 last Thursday. To prevent a destabilizing selloff in U.S. government debt, Treasury Secretary Scott Bessent signaled that Japan will leverage the Federal Reserve’s Foreign and International Monetary Authorities (FIMA) Repo Facility, which currently operates with a $60 billion daily counterparty limit. On the domestic economic front, factory conditions surged as the July ISM manufacturing index jumped to 55.6—its highest reading since May 2022—though three-quarters of respondents cited still-rising prices with the prices sub-index sticky at 71.1. This economic strength combined with persistent pricing pressures will test the credibility of Fed Chairman Kevin Warsh ahead of the central bank’s September 16 policy meeting, with prediction market participants on Kalshi pricing in slightly cooler nonfarm payroll additions of under 80,000 for July.

Business & Earnings

Palantir (PLTR) surged 12% in extended trading after posting blowout Q2 earnings of 41 cents per share on revenue of $1.94 billion (up 93% year-over-year), driven by a staggering 149% rise in U.S. commercial revenue to $764 million. On the megacap front, Amazon (AMZN) eclipsed the $3 trillion market cap milestone for the first time as shares climbed 5% to an all-time high, riding a post-earnings wave after CEO Andy Jassy defended raising the company’s AI capital expenditure budget to $220 billion. Meanwhile, AstraZeneca (AZN) shares plunged 9% following reports of ongoing merger talks with peer Bristol Myers Squibb (BMY) over a historic, oncology-focused $400 billion pharmaceutical megadeal. Lastly, payments giant Visa (V) announced a $2.4 billion all-cash acquisition of Israeli behavioral biometrics startup BioCatch to fortify its value-added cybersecurity services against AI-fueled fraud.

Investing & Commentary

Jim Cramer warned that the rise of thematic “basket trades” is distorting high-quality stocks like Boeing (BA) and Costco (COST) based on short-term oil and geopolitical headlines, creating prime buying opportunities for long-term investors before corporate earnings force a focus back on individual business fundamentals. Additionally, analysts highlighted a valuation anomaly for the “Magnificent Seven,” noting that the group’s forward price-to-earnings ratio has fallen below 24—its lowest level in over three years—which could pave the way for a catch-up trade as AI infrastructure investments begin proving their return on investment. On Wall Street analyst desks, Truist upgraded optical fiber manufacturer Corning (GLW) to buy, calling its 45% July slump a highly attractive entry point, while Starbucks (SBUX) was upgraded to hold by Melius Research as CEO Brian Niccol’s turnaround gains structural traction.

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