(Aug 4): Stocks joined bonds higher as cooling tensions in the Middle East spurred a drop in oil prices, allaying worries about inflation.
The revival in risk appetite drove the S&P 500 up 1.5% to a striking distance of a record. A gauge of megacaps had its best day since March as Amazon.com Inc.’s value topped US$3 trillion. US crude settled around US$80. Treasury yields fell after last week’s intense volatility.
Iran suggested negotiations to get more ships moving through the Strait of Hormuz are making progress, after President Donald Trump called off what he said was a major attack on the Islamic Republic.
“We’re talking about the strait, the opening of the strait, having it open literally by tomorrow, completely open, and that’s phase one,” Trump said. Phase two includes denuclearization talks, he added.
The geopolitical landscape is once again setting the agenda for the macro outlook and providing solace for dip buyers, according to Ian Lyngen at BMO Capital Markets.
Still, the on-again, off-again nature of US-Iran diplomacy could mean earnings and jobs data will have to do the heavy lifting for the bulls this week, according to Chris Larkin at E*Trade from Morgan Stanley.
In the countdown to a slew of jobs figures, data showed US manufacturing activity expanded in July at the fastest pace in more than four years as demand remained strong, production surged and firms added workers.
Forces that propelled US stocks to record highs this year remain “firmly intact” after a reset in retail investors’ speculative trading, according to Citadel Securities’s Scott Rubner.
“Markets are transitioning from a flow-driven environment back to one increasingly dictated by earnings, corporate demand, and the macroeconomic backdrop,” he wrote.
Corporate Highlights:
- Palantir Technologies Inc. raised its sales and income forecasts for the full year after posting second-quarter sales that far exceeded Wall Street’s estimates.
- The Trump administration plans to host artificial-intelligence companies at the White House on Tuesday to discuss a new US framework for conducting voluntary safety tests of AI models, according to people familiar with the matter.
- Boeing Co. received sign off for the 737 Max 7 from the Federal Aviation Administration, ending a drawn-out certification process that was upended by two fatal crashes and quality lapses at the US planemaker.
- Marriott International Inc. said that room growth for 2026 would likely come in at the lower end of earlier guidance, driven by construction delays in the Middle East.
- Michigan health authorities were in touch with Taco Bell’s parent company, Yum! Brands Inc., about a parasitic outbreak in early July, weeks before the company officially alerted consumers.
What Bloomberg strategists say...
“Chairman Kevin Warsh’s limited guidance on the Fed’s reaction function means upcoming data, oil prices and the bond market will have a greater influence on the market’s expectations for the policy path.”
—Michael Ball, Macro Strategist, Markets Live.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 1.5% as of 4 p.m. New York time
- The Nasdaq 100 rose 1.8%
- The Dow Jones Industrial Average rose 1.3%
- The MSCI World Index rose 1.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to US$1.1510
- The British pound fell 0.4% to US$1.3433
- The Japanese yen rose 0.3% to 156.99 per dollar
Cryptocurrencies
- Bitcoin rose 0.6% to US$63,803.91
- Ether fell 0.7% to US$1,869.04
Bonds
- The yield on 10-year Treasuries declined five basis points to 4.68%
- Germany’s 10-year yield declined five basis points to 3.15%
- Britain’s 10-year yield declined 10 basis points to 4.95%
Commodities
- West Texas Intermediate crude fell 5.4% to US$80.11 a barrel
- Spot gold rose 0.1% to US$4,051.16 an ounce
Uploaded by Jason Ng