WS #13953

The market narrative is dominated by a de-escalation signal in the Middle East: Ukraine has halted drone strikes on oil tankers using the Russian port of Novorossiysk following a request from US Vice President Vance, as reported by the Financial Times and corroborated by multiple Bluesky posts. This directly counters the prevailing escalation thesis and is likely to dampen oil price spikes, pressuring energy stocks while providing relief to airlines and consumers. However, the Strait of Hormuz deadlock persists, with Trump claiming 'total control' and oil prices extending gains for a fourth day, suggesting the oil risk premium remains elevated. The AI infrastructure earnings season continues to be a major driver: Cisco beat and raised guidance but shares fell on profit-taking; Cerebras missed revenue but raised full-year guidance, yet stock plunged 14%; Coherent beat and raised but shares slipped; CoreWeave and Nebius surged on strong results, lifting the neocloud complex. July CPI met expectations, easing fears of a Fed rate hike, with only 38.1% odds of a September hike, supporting tech and growth stocks. The US budget deficit widened to a record $432B in July, a fiscal concern but not immediately market-moving. MSCI index review changes are underway, with notable additions like SanDisk and Carpenter Tech to the MSCI World Index, which could drive passive flows.