August 4th Market Overview

Happy Tuesday

New records on the Dow and S&P, with the Nasdaq doing most of the pulling. Oil fell hard on talk of a Hormuz deal, but gold still held above $4,100, which tells you nobody has fully unclenched. Strong tape, unfinished story for now, I’m trying to not really hype up these war headlines because the reality is the market has cared less and less as time goes by.

Let’s dig in...

Today's Big Picture

1. Hormuz Deal Talk Knocks The Wind Out Of Oil

Treasury Secretary Scott Bessent said on CNBC there is a chance of a deal with Iran today or tomorrow, and that it would mean freedom of movement through the strait. Brent traded under $80 for the first time since early July. Goldman says Gulf oil flows are running near a third of prewar levels, so a real reopening puts a lot of barrels back on the water. A cargo ship still took a projectile off Oman this morning, so today's move is priced on hope, not on paper.

2. Palantir Reminds Everyone Why They Own It

Palantir did $1.94 billion in revenue, close to double last year, and lifted its full-year outlook to $8.16 billion. It closed 220 deals worth a million dollars or more, and 73 of those were worth ten million or more. Citi moved its target to $245. One quarter wiped out most of the stock's loss for the year and pulled chips and software up with it.

3. Caterpillar Shows The AI Build Is A Physical Business

Caterpillar cleared $20 billion in quarterly sales for the first time, with construction and power each above $8 billion. It converted a plant in Wamego, Kansas to build turbine engines and is restarting 10-megawatt generators it stopped making in 2022. When a company brings a dead product line back, that demand is not a forecast. It is a backlog.

Market Overview

Index Performance

Stock Spotlight

Amazon $AMZN ( ▼ 2.32% )  
crossed $3 trillion in market value for the first time, then gave the day back once word got out that Jeff Bezos lined up a $4 billion share sale.

Wayfair $W ( ▲ 29.97% )  
posted its best second quarter since 2020. US furniture demand has been dead since the housing market froze, so this is the first real pulse in years.

Novo Nordisk $NVO ( ▼ 5.97% )  
sold about $500 million of its new Wegovy pill, short of what the street wanted. Its experimental drug CagriSema also failed to match Eli Lilly's tirzepatide on blood sugar, and Jefferies said that leaves a lot of open questions for 2027.

Tesla $TSLA ( ▲ 1.64% )  
delivered 93,579 cars in China in July, well ahead of last year. China has been the soft spot all year, so that number carries more weight than the usual monthly print.

Big Name Updates

Toyota $TM ( ▲ 1.61% )  
raised its full-year operating profit forecast to 3.4 trillion yen, roughly $21 billion, and announced a $6 billion buyback. The weak yen did the work. Toyota now assumes 160 to the dollar instead of 150.

BP $BP ( ▼ 4.11% )  
beat on both lines and put its US biogas business, Archaea Energy, up for sale. New CEO Meg O'Neill said the company has written off too much value and its costs are not resilient at low prices. That is blunt for an oil major.

HSBC $HSBC ( ▼ 1.69% )  
reported higher profit and restarted buybacks, though the $1 billion size struck investors as small. Trade finance fees grew as Asian economies do more business with each other.

Spotify $SPOT ( ▼ 0.67% )  
reached 300 million premium subscribers and a record gross margin. Costs are climbing too, with more going to marketing, cloud and new AI features.

NXP Semiconductors $NXPI ( ▲ 5.99% )  
said BMW will put its ultra-wideband chips in select 2026 models for hands-free digital keys and in-cabin detection.

Other Notable Company News

Prologis $PLD ( ▼ 3.5% )  
agreed to buy British warehouse landlord Segro for $18.8 billion.

Bitdeer $BTDR ( ▼ 0.18% )  
is reportedly behind the Norway capacity in Anthropic's $10 billion compute deal with Volta Infra.

DigitalOcean $DOCN ( ▲ 1.53% )  
beat and raised, with future contracted revenue at $894 million, twelve times where it stood a year ago.

Apollo Global Management $APO ( ▲ 2.83% )  
reported weak private equity results as fund exits stayed frozen.

Aehr Test Systems $AEHR ( ▲ 19.82% )  
received a follow-on order from its lead silicon photonics customer, shipping in the first half of 2027.

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Sector Watch

Bond Market

The 10-year yield slid back to where it sat before Fed Chair Kevin Warsh's press conference last week. Cheaper oil did that. Falling crude takes heat out of the inflation math, which is the whole ballgame for this Fed.

Policy Watch

Fed

June job openings came in at 7.4 million, right around expectations. Hiring ticked up, layoffs stayed flat, quits barely moved. The same low-hire, low-fire market we have had all year.

Warsh has been the one arguing rates may need to go up rather than down. Every dollar off crude makes that a harder case to carry.

Fiscal & Trade

• Texas Governor Greg Abbott ordered an audit of every data center waiting on a grid connection and froze new approvals until it finishes. NRG and Vistra took the hit. Caterpillar and engine maker Innio went the other way, because off-grid power gets more valuable the moment the grid says no.

• The Federal Communications Commission is preparing a rule to bar new Chinese optical transceivers, the parts that move data over fiber inside AI data centers. Photonics names ran hard on it.

• The White House brought in Meta, Google, OpenAI and Anthropic to discuss voluntary testing of how well advanced AI models can break into systems. Two of them recently disclosed that their own tools had breached other companies' networks.

International

The proposal on Hormuz would send Gulf-bound ships in through Iranian waters and let departing ships leave through Omani waters without paying a toll. The toll is what has held these talks up for weeks.

What to Watch

The AI company quietly automating every Walmart distribution center. 
23 billion in orders on the book.

It's just one of seven names in this free MarketBeat report.

SpaceX Reports After The Close

First earnings ever as a public company, with the call at 4:30 Eastern. The street wants revenue near $6.93 billion and a loss of 26 cents. Starlink is the only profitable piece of the business, so subscriber adds and capital spending, which ran $10.1 billion last quarter, matter more than the headline number.

The Lock-Up Thursday

One SpaceX lock-up period ends Thursday, according to RBC Capital Markets, so insiders can start selling. Short sellers are up roughly $8.3 billion on paper since June. Fresh supply into a stock trading under its $135 offer price is worth keeping an eye on.

AMD After The Bell

AMD reports tonight as well. Morgan Stanley sees cloud capital spending reaching $1.4 trillion in 2027, and AMD's data center guidance is one honest way to check that math.

Thanks for reading - you are now the more informed 🙂

- John

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