WS #12677

The dominant theme this window is the escalation of the Middle East conflict, with multiple corroborating reports of a widening war. Oil prices spiked to $100/barrel for the first time since May, with Brent easing to ~$97.63 and WTI near $89.77. The conflict has expanded beyond the Strait of Hormuz: Houthi militants attacked two Saudi oil tankers in the Red Sea, threatening the Bab el-Mandab Strait, and Saudi Arabia launched strikes on Yemen's Red Sea coast. A new front opened in the Black Sea where drone attacks halted operations at Russia's CPC terminal, forcing Kazakhstan to cut production. US strikes against Iran continued for a 13th consecutive night, and President Trump warned China and Russia against supplying weapons to Iran. The market is now pricing in the risk of a prolonged conflict, with the S&P 500 down ~2% since the strikes began. However, oil prices eased on Friday as some profit-taking occurred, providing a slight counter-signal to the bearish energy narrative. On the corporate front, Paramount agreed to delay its $110B merger with Warner Bros. Discovery until June 2027 amid legal challenges, which could cost Paramount over $1.9B in ticking fees. Intel shares plunged ~15% after its Q2 earnings miss and lowered full-year revenue growth outlook, dragging down the semiconductor sector (SOX -4.5%). Alphabet shares are in correction territory as investors question returns on AI spending after Q2 free cash flow turned negative. Meta's stock continued its losing streak (down 7 days in a row) amid broader tech weakness. The Nasdaq fell 0.64% while the Dow gained 0.45%, reflecting a rotation out of tech into value. New US tariffs of 10-12.5% on 60 trade partners were imposed under Section 301, facing a fresh lawsuit from the Liberty Justice Center. The ICC voted to remove Chief Prosecutor Karim Khan, a development with geopolitical implications.