Things you need to know
- Stocks EXPLODE – new highs all over the place.
- Bessent says – we should have a deal ‘today or tomorrow’.
- Oil plunges, Bond yields retreat and Gold rallies.
- Eco data continues to point to a strong economy. Earnings support that narrative.
- Try the Linguine and Summer Garden Zucchini
What a difference a few headlines make.
Yesterday wasn’t about one event…it was about a series of events all moving in the same direction. Lower oil…lower Treasury yields…blowout earnings…continued AI investment…and suddenly the algo’s went from cautious to all-in.. The result? The Dow, S&P, Russell and Equal Weight S&P all closed at new all-time highs.
The Dow up 907 pts or 1.7%, the S&P up 136 pts or 1.8%, the Nasdaq added 670 pts or 2.6%, the Russell up 55 pts or 1.8%, the Transports added 548 pts or 2.6%, the Equal Weight S&P up 125 pts or 1.4% while the Mag 7 added 258 pts or 0.7%.
Now it wasn’t about just one thing…or one headline…..No, no, no…. It wasn’t just oil. It wasn’t just earnings. It wasn’t just AI. It was the culmination of powerful forces that had been building beneath the surface for weeks.
Yesterday crude collapsed $5.40, or 6.5%, as investors became increasingly convinced that the conflict with Iran may be moving toward a diplomatic solution. Trump’s decision over the weekend to call off what many described as a major military strike, combined with Treasury Secretary Scott Bessent’s comments that an agreement to reopen the Strait of Hormuz could come “today or tomorrow,” changed the narrative almost overnight.
If the Strait of Hormuz reopens and oil begins flowing freely again, supply increases, prices fall, inflation pressures ease, and suddenly one of the market’s biggest concerns begins to fade.
And then, part of yesterday’s rally came from the bond market as well. Treasury prices advanced, with both the TLT and TLH rising about 0.75%, pushing yields lower after they had kissed levels not seen since January 2025. Lower oil…lower yields…less concern about reigniting inflation.
That’s exactly the combination equity investors need to see. The 10 yr fell 6 bps to end the day at 4.61%; the 30 yr fell 5 bps to end the day at 5.17%…. but let’s be honest – inflation won’t normalize overnight. Yes energy relief helps, but prices are sticky, and that will limit how far yields will fall in the short term. This morning the 10 yr is down 1 bps at 4.60% while the 30 yr is down 2 bps at 5.15%.
But that was only part of the story. Then came earnings…And boy, did they blow the doors off.
CAT may have delivered the most important report of the day. The company confirmed that the AI infrastructure build-out remains alive and well. The stock exploded at the opening bell, leaving an $85 gap on the chart and surging more than 12% before settling back to finish the day up about 7%, or $61 a share. That move alone contributed roughly 276 points to the Dow Jones Industrial Average.
And that move is very important – Why? Because AI isn’t just Nvidia. It’s Data centers that require land, construction, generators, power systems and heavy equipment. CAT reminded investors that this story extends far beyond semiconductors and includes all kinds of adjacent businesses.
MRK and PFE reinforced another important theme. Healthcare continues to generate dependable earnings and steady cash flow, reminding investors that while AI may dominate the headlines, quality defensive businesses are still creating value.
Then there was PLTR. The company didn’t just beat expectations—it proved that businesses are paying real money for AI solutions today—not promises about what AI might become tomorrow.
Karp raised guidance, telling us that demand remained extraordinarily strong, and that caused the algo’s to trip over each other as they tried to ‘get back in’…. sending the stock up 37%, adding nearly $29 in the session. Once again, the market made its message crystal clear.
Don’t just tell me about AI…Show me the money.
And then……..after the closing bell, SpaceX reported, beating expectations across the board and reinforcing the idea that corporate America continues investing aggressively in the future. Here’s what SpaceX really told us.
This company is no longer simply launching rockets or selling satellite internet. It’s becoming another critical piece of the AI infrastructure story. Think about it. AI requires compute…compute requires connectivity…connectivity requires satellites, networks and massive amounts of capital investment. SpaceX is positioning itself squarely in that ecosystem. THAT’S the real story.
During the day yesterday – they took the stock up 9.5% or $10/sh, but this morning – they are killing it…. sending the stock down 12% or $15 share at $110. The decline, in my opinion, isn’t a rejection of the business. It’s Algo’s and traders spinning their wheels…. Because here’s the reality…Here’s where the story gets interesting because it’s not over….
Tomorrow is the next headline. That’s when roughly 900 million previously locked-up shares become eligible for sale. The question isn’t whether they can be sold. The question is how many actually will be sold. If insiders decide to hold their shares, the market may breathe a sigh of relief. But if a meaningful percentage of that locked up stock comes to the market, then expect volatility as the market works to absorb that additional supply. Either way, Thursday could prove to be even more important for SpaceX investors.
And the eco data – came mostly in line – there was nothing that is a real cause for concern at all.
Individually, each of all of those developments was important – taken together, they became the catalyst for an eruption of buying that sent the algo’s into a FRENZY.
Eco data today includes – July ADP – and that is expected to show 65k new jobs created….at 9:45 -we’ll get S&P Services PMI – and that is expected to be 53.6 – and ISM PMI expected to be 54.5 – both readings well into the expansion zone…. We will also get the ISM Services Prices Paid component and that is expected to come in at 65 – down from 67.7 and that too is important – it suggests upward pressure on services inflation is cooling.
Oil is holding steady at $75.85 as we await any more news…..we are now in the $71/$79 trading range and the path of least resistance is lower as long as the geo-political situation continues to cool.
Gold is up $100 at $4,187……the move credited to the fact that the tone is changing – in the mid-east and changing at the FED. Markets are still pricing in one rate hike – September – something I still don’t see happening…, since inflationary pressures are subsiding not increasing…but we have about 7 weeks of data to digest – so let’s see how this goes. We are now up and thru the trendline at $4,160 – after having built a nice base at $4,000. If we hold here – then the new range becomes $4,160/$4,400.
Earnings today include reports from LLY, NVO, DIS, UBER, SNDK & WDC. They represent Healthcare, Consumer & Travel, and AI Infrastructure.
European markets are ticking higher.
US futures are up again…… Dow up 190 pts, S&P’s up 35, Nasdaq up 77 pts while the Russell is up 5.
The S&P 500 closed at 7,736 up 136 points – taking us into a new century…. It feels a bit euphoric to me…and the recent moves make me cautious… The breakout above 7,609 is real. The enthusiasm is real. The euphoria is a bit overdone…. And that’s exactly why you need to stay disciplined. Remember…bull markets don’t end because prices go up. They end because expectations get too far ahead of reality.
There is no resistance on the chart since we are in unchartered territory – there is only assumptions….and the assumption now is we could see the S&P trade up 7830 ish before this slows.
Let me remind you – chasing excitement has never been a successful investment strategy. Remember – you are invested. You are participating. Let the market work for you. Don’t get FOMO’ized – stick to your plan.
If you’d like to discuss your goals, evaluate the risk in your portfolio or simply get a second opinion, give me a call at 561-931-0190 or better yet – click on this link to connect. https://slatestone.com/contact-us/
I’m always happy to provide complimentary portfolio review and risk assessment.
Take good care,
Kp
[email protected]
Source: Bloomberg, CNBC, Reuters, Wall Street Journal
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Linguine w/Summer Garden Zucchini
Linguine, green & yellow zucchini, garlic, Vidalia onion, s&p, olive oil, Fresh shredded Parmegiana cheese, and a bit of butter.
Heat up a large sauté pan – add some oil and 3 cloves of chopped garlic. Allow to cook for a couple of mins.
While this is happening – peel and dice the onion. Add to the pan…stir to coat – turn heat to medium. Next trim the zucchini on both ends. Cut in half and then dice. Use equal amounts of green and yellow zucchini. Season with s&p, add a dollop of butter, stir to coat – reduce heat to med low.
Bring a pot of salted water to a rolling boil and add the linguine. Cook for 8 mins or so…taste – you want it to be aldente. When ready – strain – reserving a mugful of the water – and add directly to the sauté pan with the zucchini.
Mix well – add in two handfuls of the shredded parmegiana and mix so that the cheese melts. If it appears to dry – add back ½ the mug of pasta water – stir to coat.
Serve immediately with your favorite white wine. Always have extra cheese on the table for your guests.
Buon Appetito