WS #14041

The dominant theme remains Middle East tensions with the Strait of Hormuz conflict, but the window shows a notable de-escalation in oil prices despite a fresh attack on two ADNOC vessels. Oil fell 2.1-2.4% (Brent to $87.07, WTI to $81.25) as IEA cut global demand forecasts by 510k bpd and US crude inventories surged 17.4M barrels, the largest build since January 2023. This counters the bullish oil thesis from the prior window, pressuring energy names while benefiting airlines and consumers. The S&P 500 hit a record close at 7,798.99 (+0.65%) on tame PPI data, reinforcing the Fed-hold narrative, though Cleveland Fed's Hammack reiterated calls for immediate rate hikes. AI-driven tech strength continues with Applied Materials reporting record revenue and raising 2026 outlook, while Cisco fell 8.4% on high expectations despite beating estimates. New developments include Trump imposing tariffs on drone imports (100% on sensitive drones, 15% on EU/Japan/Korea/Taiwan, 10% on UK), Goldman Sachs acquiring NEOS Investments for up to $2.25B, and AMD planning a $5B debt-funded AI expansion. Reddit surged 11% on S&P 500 inclusion, and Amazon crossed $3T market cap. The Hormuz attack is corroborated by multiple sources (GDELT, LBC, Oman Observer) but oil's muted response suggests market desensitization.