WS #13171

The dominant narrative remains the escalating US-Iran conflict, with oil prices surging and supply disruptions at the Strait of Hormuz. Iran's IRGC attacked two US-escorted tankers, and Iran's Fars News listed regional targets including Saudi oil fields and UAE refineries, escalating fears of broader Gulf supply disruption. Brent crude settled near $88, up 1.2%, with a ~24% monthly gain, while WTI rose 1% to below $85. This is bullish for energy (XOM, CVX) and bearish for airlines and consumer discretionary. Counter-signals include Houthi denial of fees at Bab el-Mandeb and Oman's proposed voluntary fees plan, but these are minor. The MAG7 divergence persists: Amazon surged 15.3% on strong cloud growth, while Apple fell 7.4% on weak guidance, with Nvidia reclaiming the top market cap. This divergence is a key signal for tech sector rotation. Additionally, Russia launched a massive missile strike on Kyiv, with a missile landing in Poland, escalating Ukraine-Russia tensions, which could impact European energy and defense stocks. The Fed's divided stance and rising Treasury yields (10-year above 4.7%) add macro pressure, but strong tech earnings are offsetting.