Stocks Supported by Renewed Middle East Optimism

The S&P 500 Index ($SPX) (SPY) today is up +0.04%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.32%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.07%.  September E-mini S&P futures (ESU26) are up +0.02%, and September E-mini Nasdaq futures (NQU26) are down -0.11%.

Stock indices are mixed today.  Stocks found support after crude prices gave up a 2% overnight advance and turned negative, knocking bond yields lower after Pakistan signaled the US and Iran were close to an arrangement that could reopen the Strait of Hormuz. 

Stock index futures were initially under pressure in overnight trade as rising crude oil prices fanned inflation fears and pushed bond yields higher.  WTI crude initially jumped more than +2% in overnight trade, adding to Monday’s +5% surge, as President Trump hardened his stance toward Iran.  The jump in crude prices initially pushed the 10-year T-note yield up to a 1-week high of 4.73%, but yields fell back with crude prices, and the 10-year T-note yield is now down -2 bp to 4.68%.

The outlook for strong Q2 earnings is a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence.  AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2.  So far, earnings results have been positive, with 85% of the 446 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. 

Sep WTI crude oil prices (CLU26) relinquished a +2% increase in overnight trade and turned lower when Al Jazeera said that talks between Oman and Iran to reopen the Strait of Hormuz have reached an advanced stage.  Pakistani defense minister Khawaja Asif said today that signals in the "last two to three days are that we are close to some sort of agreement."

Crude prices initially jumped to a 1-week high today after President Trump late Monday hardened his stance toward Iran, making it unlikely there will soon be a deal to reopen the Strait of Hormuz.  In response to Iran’s demand for compensation for war damages, President Trump said he will “demand compensation from Iran for people killed and wounded with roadside bombs and many conflicts to people in Lebanon, Syria, Yemen and Gaza over the last 50 years.”  Crude prices fell from their highs today 

On Sunday, Mr. Trump signaled he's prepared to let economic pressure on Iran build rather than launch additional military strikes, saying the US was only "semi-negotiating" with Iran on the Strait of Hormuz and that the US blockade of Iran was deepening the country's financial woes.

The risk of a renewed flare-up across the Middle East remains high, as another UAE tanker was targeted by a missile on Saturday while transiting the Strait of Hormuz.  Also, on Sunday, Houthi militants in Yemen claimed an attack on Saudi Arabia's Jazan refinery.

The markets are discounting a 48% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is up +0.40%.  China's Shanghai Composite closed down -0.82%.  Japan's Nikkei-225 Stock Average did not trade, with Japanese markets closed for the Mountain Day holiday.

Interest Rates

September 10-year T-notes (ZNU6) are up +4 ticks today.  The 10-year T-note yield is down -2.9 bp to 4.678%.  Sep T-notes rebounded from a 1-week low today and moved higher, and the 10-year T-note yield fell from a 1-week high of 4.733% and turned lower.  Short covering emerged in T-notes today after WTI crude gave up most of a +2% overnight advance, weakening inflation expectations and boosting T-notes.

T-notes initially moved lower today after WTI crude oil rose more than +2% to a 1-week high. Also, supply pressures are bearish for T-notes as the Treasury will auction $125 billion of T-notes and T-bonds this week, beginning with a $58 billion auction of 3-year T-notes later today. 

European government bond yields are moving lower today.  The 10-year German bund yield fell from a 1-week high of 3.208% and is down -1.2 bp to 3.167%.  The 10-year UK gilt yield fell from a 1-week high of 5.050% and is down -1.6 bp to 4.973%.

Markets are discounting an 89% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.

US Stock Movers

Chipmakers and AI-infrastructure stocks are moving higher today, providing support to the broader market. ASML Holding NV (ASML) and KLA Corp (KLAC) are up more than +4%, and Sandisk (SNDK), Applied Materials (AMAT), and Lam Research (LRCX) are up more than +2%.  Also, Analog Devices (ADI), Nvidia (NVDA), NXP Semiconductors (NXPI), Microchip Technology (MCHP), Western Digital (WDC), and Texas Instruments (TXN) are up more than +1%.

Software stocks are under pressure today, weighing on the overall market.  Datadog (DDOG) is down more than -4%, and Oracle (ORCL) is down more than -3%.  Also, Autodesk (ADSK) and Workday (WDAY) are down more than -2%, and Microsoft (MSFT), Servicenow (NOW), Adobe Systems (ADBE), and Thomson Reuters Corp (TRI) are down more than +1%. 

Rapid7 Inc. (RPD) is up more than +19% after raising its full-year adjusted EPS forecast to $1.78 to $1.83 from a previous forecast of $1.52 to $1.60, stronger than the consensus of $1.56. 

Riot Platforms (RIOT) is up more than +14% after striking a 20-year $9.1 billion cloud deal with Anthropic to provide the company with 191 megawatts of computing power. 

Everpure (P) is up more than +6% after announcing it had secured a design win and supply agreement with a second top five hyperscaler. 

Cardinal Health (CAH) is up more than +4% to lead gainers in the S&P 500 after reporting Q4 adjusted EPS of $2.91, stronger than the consensus of $2.42 and forecasting 2027 adjusted EPS of $12.40 to $12.60, better than the consensus of $12.06.

Jabil (JBL) is up more than +4% after UBS upgraded the stock to buy from neutral with a price target of $430. 

Best Buy (BBY) is up more than +3% after Truist Securities upgraded the stock to buy from hold with a price target of $95. 

ON Holding AG (ONON) is down more than -21% after reporting weaker-than-expected Q2 net sales.  The weakness in ON Holding has also knocked Nike (NKE) down by more than -1%.

Amentum Holdings (AMTM) is down more than -7% after cutting its full-year revenue forecast to $13.80 billion to $13.95 billion from a previous forecast of $13.95 billion to $14.30 billion. 

AppLovin (APP) is down more than -5% to lead losers in the Nasdaq 100 after Bank of America Global Research downgraded the stock to neutral from buy.

Venture Global (VG) is down more than -3% after reporting Q2 adjusted Ebitda of $2.49 billion, below the consensus of $2.51 billion. 

Rocket Lab (RKLB) is down more than -2% after forecasting a Q3 Ebitda loss of -$17 million to -$23 million, a wider loss than the consensus of -$12.4 million. 

Earnings Reports (8/11/2026)

Aramark (ARMK), Cardinal Health Inc (CAH), Cava Group Inc (CAVA), CoreWeave Inc (CRWV), H&R Block Inc (HRB), Lumentum Holdings Inc (LITE), Middleby Corp/The (MIDD), On Holding AG (ONON), Smithfield Foods Inc (SFD), Super Micro Computer Inc (SMCI).