WS #13173

The dominant narrative remains the US-Iran conflict, which is ESCALATING. Iran's IRGC struck two US-escorted oil tankers in the Strait of Hormuz, forcing four others to turn back, and Kpler data shows Hormuz traffic collapsed 77% day-on-day to just five vessels, all using Iran's unilateral scheme. This is corroborated by multiple sources (Reuters, Guardian, ANSA, Vietnamese, Thai outlets) and directly threatens ~20% of global oil trade, underpinning the oil price surge (WTI +1.29% to $84.67, Brent +1.22% to $90.12; Brent +24% in July). Separately, CNN reports the US may strike a suspected new nuclear site near Natanz this weekend, and WSJ reports Trump has ordered a new multi-day strike wave on Iran. These developments are bullish for energy (XOM, CVX, XLE) and bearish for airlines (DAL, UAL, AAL) and broader risk appetite. However, a counter-signal emerged: the UN Secretary-General called for an end to the fighting and restoration of navigation rights in Hormuz and Bab el-Mandeb, and there are Polymarket trades on an Israel-Iran ceasefire continuing through early August, suggesting some market participants are pricing de-escalation. This counter-signal is low-confidence but could dampen the oil spike if it gains traction. In equities, the MAG7 divergence is stark: Amazon surged 15%+ after blowout Q2 (AWS revenue +36.7%, AI run-rate >$25B), while Apple plunged ~9-10% on a weak revenue outlook (9-11% growth vs 12% expected) due to severe component shortages, including AI computing capacity warnings in its 10-Q. Microsoft also rallied 15.5% on strong cloud guidance. This creates a clear rotation: AMZN and MSFT bullish, AAPL bearish, with NVDA and other chip names mixed. The AI capex narrative is being validated by AMZN/MSFT results, but Apple's supply chain warning signals broader component shortage risk. OpenAI is reportedly delaying its IPO to next year amid investor concerns, while Anthropic is accelerating its fall IPO, a signal for AI private-market sentiment. Also notable: the 30-year Treasury yield hit 5.25-5.26%, the highest since 2007, and the 10-year approached 4.8%, reflecting inflation fears from oil and Fed Chair Warsh's hawkish stance (Fed held rates at 3.50-3.75% with three dissents for a hike). This yield spike is a headwind for high-multiple tech and REITs, but financials may benefit. Overall, the market is caught between an oil-driven inflation shock and strong AI earnings, with the Iran conflict as the key swing factor.