Wall Street spent last week betting that the Strait of Hormuz would reopen soon. Over the weekend, Iran said it is not even talking to Washington directly about it. That denial is the reason U.S. stock futures turned lower Sunday evening while oil moved higher — the market had priced in a deal that suddenly looks further away.
Trading in futures contracts, which run Sunday night ahead of Monday’s regular session, showed S&P 500 futures down about 0.2%, Dow Jones Industrial Average futures off 99 points, or 0.2%, and Nasdaq-100 futures up 0.1%. West Texas Intermediate crude rose 1% to just above $79 a barrel on Sunday.
The reversal came after Iranian Foreign Minister Abbas Araghchi said Tehran is not currently in direct talks with the United States to end the war and open the strait, even as Washington maintained that an agreement is close. Roughly a fifth of the world’s seaborne oil moves through that waterway, so every shift in the odds of a deal shows up first in the crude price and then in everything that runs on fuel — airlines, truckers, chemicals, food distribution.
Coming off the best week since April
The soft open follows a powerful five days. The S&P 500 closed Friday at a record 7,757.64, up 0.62%, while the Nasdaq Composite climbed 1.3% to 26,690.62 and the Dow added 151.83 points, or 0.28%, to 54,036.93. For the week, the Nasdaq jumped 5.2%, the S&P 500 gained 3.6% and the Dow rose 3% — the strongest weekly showing since April.
What drove it was a jobs report that came in badly and was received well. The Labor Department reported that nonfarm payrolls fell by 23,000 in July, against economist forecasts for a gain of 80,000, with the prior two months revised sharply lower. The unemployment rate slipped to 4.1% from 4.2% as workers left the labor force. The combined May and June revisions took 103,000 jobs off the books.
In an economy where the Federal Reserve’s next move is widely expected to be a rate increase, a weak labor market is read as relief. Odds of a hike at the September meeting fell to roughly 44% on the CME FedWatch tool, down from 55% the previous session and 67% a week earlier.
Rates, dollar and gold
Treasury yields fell across the curve Friday: the 10-year down four basis points to 4.64%, the rate-sensitive two-year off five basis points to 4.19%, and the 30-year down three to 5.19%. The dollar index dropped 0.3% to 99.60 as the euro touched a seven-week high near $1.1567. Cheaper money lifts the two assets that respond most to it. Gold rose 2.4% Friday to about $4,347 an ounce, a seven-week high, capping a weekly gain near 7.5% — its best week in seven months.
Market movers
Atlassian surged 35% after fourth-quarter revenue rose 28% from a year earlier, remaining performance obligations climbed 44% to $4.82 billion, and the company guided first-quarter revenue to $1.705 billion to $1.715 billion, above the $1.67 billion consensus. Twilio gained 23% on a second-quarter beat and a dollar-based net expansion rate of 116%, ahead of the 110% estimate. Palantir finished its best week since 2024, and Airbnb rallied after beating on earnings. Earnings season has been unusually strong: of 440 S&P 500 companies reported so far, 87% have topped expectations, versus an 82% beat rate a year ago.
Commodities
Crude closed Friday lower after wide intraday swings, with West Texas Intermediate down 0.41% to $76.97 a barrel and Brent off 0.52% to $82.06. Sunday’s move back above $79 wiped out that decline and then some.
Overseas
Asia opened Monday firmer despite the U.S. futures dip. Japan’s Nikkei 225 added more than 0.54% with the Topix marginally higher, South Korea’s Kospi gained 0.53% and the Kosdaq advanced 1.48%, while Australia’s S&P/ASX 200 rose 0.54%.
What’s next
Inflation is the week’s main event. The July consumer price index lands Wednesday at 8:30 a.m. Eastern alongside hourly earnings, followed by the producer price index and weekly jobless claims Thursday and July retail sales Friday. Existing home sales are due Tuesday. On the earnings calendar: Simon Property Group Monday, Super Micro Computer, Lumentum and Cardinal Health Tuesday, Coherent Wednesday, and Applied Materials and Tapestry Thursday.
A hot CPI print would put the September rate-hike question straight back on the table and undo much of Friday’s relief. A cool one, paired with any concrete movement on Hormuz, gives this rally room to keep running.
JBizNews Desk | Wall Street
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