WS #14080

The US-Iran/Hormuz crisis remains the dominant market driver, with the narrative ESCALATING. The US has signaled an indefinite naval blockade of Iran, and two ADNOC tankers were attacked in the Strait of Hormuz, bringing the total to 18. The Houthis struck Saudi Aramco's Jazan refinery for the second time in a week. Oil prices are firming, with Brent near $87-88 and WTI around $81-82, as the IEA warns of a 1.8 million barrel per day shortfall this quarter. This continues to support energy names (XOM, CVX, MPC, PSX) while pressuring airlines (DAL, UAL) and other oil-sensitive sectors. Notably, US Vice President Vance stated that lowering oil prices, not Iran's nuclear program, is now the top priority in the war, indicating potential for de-escalation efforts, but no concrete counter-signal has emerged yet. The US July retail sales fell 0.6% unexpectedly, and consumer sentiment slumped to 51.0, reinforcing a bearish consumer outlook and supporting the case for the Fed to hold rates in September (FedWatch now shows 71.2% probability of a hold). In corporate news, Reddit (RDDT) is set to join the S&P 500, with shares up 11%, and Applied Materials (AMAT) tanked despite a Q3 beat, dragging the semiconductor complex. Cisco (CSCO) also fell 8% despite strong results, highlighting high expectations in tech. The PSX-MPC merger talks have collapsed, removing a potential catalyst for refiners. Meta released an open-weight AI model 'Glimmer', which could pressure proprietary AI model providers. Overall, the market is mixed, with the S&P 500 near record highs but tech showing signs of fatigue.