Energy prices are rising, putting downward pressure on equities, to start the week. Gold and silver are down as well, while Treasuries are mostly flat. The dollar is slipping a bit.
Crude oil prices resumed climbing overnight after fresh attacks in the Middle East. The US struck Iranian missile launchers on Larak Island in the Strait of Hormuz, prompting the country to respond with missile strikes on US forces in Jordan. While the missiles were reportedly intercepted, petroleum markets reacted due to fears that more widespread kinetic action could resume. WTI futures were recently trading at $85.58, up about $17 a barrel from their early July lows.
Corporate earnings and sales continue to impress, helping underpin the stock market rally. S&P 500 Index (^SPX) profits rose 53% year-over-year in the second quarter, while revenue climbed 16%. Even if you strip out tech-related investment gains, you still get the biggest rise in profit since 2021. Many companies have raised their forward guidance, too.
S&P 500 Earnings (YOY % Change)
Source: LSEG, via the Wall Street Journal
Federal Reserve Chair Kevin Warsh delivered a key speech on interest rates and the economy at the end of last week, reiterating that the Fed’s 2% inflation target is “firm and fixed.” The net effect of the Jackson Hole, Wyoming address was to raise expectations for a September interest rate hike. Rate futures markets are now pricing in a 64% chance of a hike at the Fed meeting that concludes Sept. 16, up from 41% a week earlier.
Finally, the Tim Cook era at Apple Inc. (AAPL) is coming to a close. New CEO John Ternus is taking over the role from Cook, who succeeded Steve Jobs in 2011. Cook increased Apple’s value and reach tremendously during his tenure, with the stock's market capitalization soaring above $4 trillion from $350 billion. Products like AirPods, Apple Watch, and MacBook Neo were among Cook's top product rollouts.
