These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a mixed start for the final trading day of the week.
1. The US will soon announce unprecedented economic measures against Iran, Treasury Secretary Scott Bessent said, intensifying the Trump administration’s effort to force Tehran’s capitulation after almost six months of war. (Bloomberg)
As the Trump administration looks to tighten pressures on Iran, a move that aims to get peace talks back on track, the barometer we’re watching, the flow of traffic through the Strait of Hormuz, is at a standstill. In our view, that combination is poised to raise questions about when the conflict may end and what other economies will have to endure. And with that in mind…
2. Stock markets and traders are breathing a sigh of relief after benign U.S. inflation data. But there’s no time to relax. Oil prices could still spring a nasty surprise as consumers feel the pinch of higher prices… But it might still be a bit too early to declare victory over inflationary pressures. There’s still one big, sticky, foul-smelling obstacle — oil. Although crude prices snapped a six-day streak of rises Thursday, energy costs remain elevated, and there’s no sign of an end to Middle East tensions. (Barron’s)
The head of Saudi Aramco believes the world has lost 2.6 billion barrels of oil since the start of the war, making it the largest supply disruption ever in cumulative terms apart from the 1979 Iranian revolution, according to Reuters calculations. That amounts to a massive 25 days of global consumption based on pre-war global oil demand of 103 million barrels per day. (Reuters)
The rebound in oil prices so far in August was the reason why we here at the Portfolio opted to look through the in-line to lower than expected figures found in this week’s July CPI and PPI data. As expected, those inflation prints helped dial back expectations for a September rate cut, lifting the market in the process.
So far this month, the average price for a barrel of WTI tracked by the U.S. Energy Information Administration are running on par with the July average but that masks the more recent move higher over the last several days. Data from AAA shows gas prices are up mid single digits over the last 30 days and almost 30% compared to a year ago.
As the disruption of traffic through the strait continues, the risk for renewed inflation pressures is rising. With that in mind, we’ll be pouring over what is revealed in the Flash August PMI report from S&P Global on August 21.
3. The US government sold 30-year bonds at the highest interest rate in a quarter century, a testament to investors’ demand for greater compensation to finance the nation’s growing deficit. The yield at the $25 billion sale Thursday came in at 5.216%, the most since 2001, even as a drop in oil prices supported US debt in secondary-market trading. The sale, which was met with decent demand, follows the Treasury Department’s 10-year auction a day earlier that drew the highest financing cost at that tenor since 2007. (Reuters)
Mortgage rates in the US and big European economies have risen again in recent weeks as the renewal of tensions between Washington and Iran reverberates through housing markets, raising costs for homebuyers and owners wanting to refinance. (FT)
When Fed Chair Kevin Warsh spoke at his last monetary policy press conference a little over two weeks ago, he commented that the market is figuring things out, pointing to the move up in interest rates. Those rates, which have moved higher since then, are arguably doing the Fed’s work for them, but that is also a headwind for the economy.
4. Applied Materials Inc. delivered an estimate-beating forecast that still got a lukewarm reaction from investors, a sign of the lofty hopes surrounding a company that’s key to the AI boom. Revenue will be approximately $10.3 billion in the fiscal fourth quarter, which runs through October, Applied Materials said in a statement Thursday. Though analysts estimated $9.62 billion on average, some projections were closer to $10 billion, according to data compiled by Bloomberg. (Bloomberg)
We warned about this very risk with the shares of Applied Materials (AMAT), especially after the market’s reception to quarterly results and guidance from Cisco (CSCO) earlier this week. We’ll have more to say in a standalone AMAT note later on Friday morning, but with Applied’s customers increasing demand visibility backed by longer-term customer commitments and rolling eight-quarter forecasts, we’ll remain shareholders.
5. OpenAI is on track to generate annualized revenue of more than $40 billion based on its current performance, according to people familiar with the matter, roughly doubling its run rate from the end of 2025 and bolstering the company’s plans for a Wall Street debut. The ChatGPT maker’s revenue has accelerated in recent months, driven in part by the growth of its AI coding software, said the people, who spoke on condition of anonymity as the information is not public. The gains also reflect momentum from subscription sales and its nascent advertising business. Its core consumer business continues to grow, too. (Bloomberg)
On Thursday, we heard Anthropic was eyeing a $2 trillion IPO valuation, and on the heels of that, we have an rather timely update about annualized revenue from OpenAI. That’s probably not a coincidence as the two companies continue to compete for the AI spotlight. However, the read through for us on OpenAI’s sharp revenue ramp is that it is another data point for rising AI adoption and usage. We look forward to digesting Anthropic’s eventual S-1 filing with the SEC, and comparing it against the one for OpenAI when that is filed in the coming months. We’re pretty sure both will be must reads for Wall Street and will contain ample learnings.
6. S&P 500 companies reported $2.64 trillion of combined net income over the last four quarters, according to data compiled by S&P Global Market Intelligence. However, a big chunk of the earnings consisted of paper gains from marking up equity investments in other companies. Last quarter, “other income” at Amazon and Alphabet, Google’s parent company, totaled roughly $121 billion combined after taxes, almost all of it from investment gains. Alphabet’s portion is on track to represent about 10% of second-quarter earnings for the S&P 500, and Amazon’s share another 5%, according to a Wall Street Journal analysis. (WSJ)
Tariff refunds have begun rolling in to big U.S. companies — in some cases providing a solid boost to earnings. Contrary to warnings that the refund process could prove slow and messy, many companies appear to have received the money with remarkable speed. So far, over 40 S&P 500 companies have reported some $9.6 billion in refunds in the past quarter or so, including at least $2.1 billion in cash already received. (WSJ)
Data from FactSet finds that, so far, 86% of S&P 500 companies which have reported Q2 2026 results delivered a positive EPS surprise. That in turn has helped propel the market to all-time highs. The question we’re working through is to what degree those paper gains and tariff refunds are already factored into EPS expectations for H2 2026, whether they are a source of potential upside or just a cushion factor for existing consensus EPS expectations.
To the extent those forces do repeat, the market is likely to ask some questions about the current consensus 2027 EPS figure of $405.17 for the S&P 500 and the implied 13% increase versus 2026.
7. Economic data today per TipRanks: Retail Sales (July), Michigan Consumer Sentiment Index (August).
8. Companies reporting today per TipRanks: Sinda (SIND), Suncrete (RMIX).
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At the time of publication, TheStreet Pro Portfolio was long AMAT.
