Stocks are trying to steady after a broad-based rout on Thursday. Gold and silver are bouncing, while oil is retreating. Treasuries and the dollar are flat.
Oil prices surged yesterday, before giving back some ground today, after the Houthi rebels in Yemen said they would target ships transporting petroleum through the Bab al-Mandeb Strait. That chokepoint connects the Red Sea to the Gulf of Aden. It has served as a way to get Saudi Arabian oil to global markets after Iran announced its blockade of the Strait of Hormuz.
USO, GOOGL (YTD % Change)
Data by YCharts
The Houthis fired on two ships already to underscore the threat. Shippers can still get Saudi crude to buyers in Asia, but they have to sail around the tip of Africa to do so – adding a month to the journey. Meanwhile, the US-Iran war continues to drag on. US WTI futures have risen more than $20 a barrel from their early July low. But at $90, they still remain below their April high of $113.
The Trump Administration is instituting tariffs of 10% to 12.5% on imports from roughly 60 countries, replacing earlier duties that were invalidated by the Supreme Court. The tariffs are based on forced-labor laws, and may have a better chance at standing up to challenges. But several countries have negotiated deals with the US already, while exemptions for products like fuel and food will water down the impact of the overall push.
Finally, leading AI names got hammered yesterday after Alphabet Inc. (GOOGL) raised its capital expenditures spending estimate for 2026. The search and cloud services company said it would spend $195 billion to $205 billion this year, up $15 billion from a prior estimate. The firm also blew away second-quarter earnings estimates, while reporting an 82% year-over-year increase in cloud revenue. Alphabet stock lost 7.1% on Thursday, reducing its year-to-date gain to just 1.6%.
