WS #13175

The dominant market narrative is the escalating US-Iran conflict, with multiple sources reporting new developments: Iran is working with Oman on Strait of Hormuz navigation mechanisms, Houthis deny plans to charge ships in the Red Sea, and a drone attack on a US-owned gas tanker at Egypt's Damietta port raises fears for Suez Canal shipping. These geopolitical tensions are driving oil prices higher, with WTI expected to test $95 in August, and tanker rates at historic highs benefiting shipping companies. The conflict is also impacting gold, which remains above $4,000, and has led to a sell-off in risk assets, with the Nasdaq down over 10% from highs. However, strong earnings from Amazon and Microsoft, with AWS growing 37% and Amazon raising capex to $220 billion, are providing a counter-narrative, lifting tech stocks and suggesting AI-driven growth remains intact. The Fed's hawkish stance, with three dissents for rate hikes and a proposal to reduce policy meetings, adds to market uncertainty, pressuring high-multiple tech and semiconductor stocks. The situation is ESCALATING on the geopolitical front, while the tech earnings narrative is providing a partial offset.