Iran and Oman near a Strait of Hormuz shipping deal, sending crude lower. Fed's Cook signals rate hike readiness. SpaceX goes exclusive with Nvidia, sending AMD down 7%.
Iran and Oman are in the final stages of drafting a commercial shipping agreement for the Strait of Hormuz, according to Reuters. The deal would give Tehran more control over vessels passing through the vital oil route. President Donald Trump said a U.S. deal to reopen the strait could happen as soon as Wednesday or Thursday, extending a timeline Treasury Secretary Scott Bessent had floated a day earlier.
Both Brent and WTI crude futures slipped as the administration's optimism spread through markets. The Strait of Hormuz handles about a fifth of the world's oil consumption. Any agreement that formalizes Tehran's role in managing traffic could reduce the risk of disruption. It does not match the terms Washington originally sought.
Fed Governor Lisa Cook said she is prepared to act on a rate hike. "Inflation is too high, and I consider the risks to the inflation side of the dual mandate higher than the risks to the employment side at this point," she said in Anchorage, Alaska. With five years of above-target inflation, the risk grows that higher inflation becomes entrenched, she added. Traders now see a 55% chance of a rate hike in the central bank's September meeting, according to the CME FedWatch tool.
AI Chip Rivalry
SpaceX shares sank 13.6% after a surge in AI spending rattled investors and clouded an otherwise expectation-beating quarter. Capital expenditures jumped sixfold to $18.4 billion, with the majority going toward AI. Elon Musk tried to allay fears, saying SpaceX would hit $1 trillion in annual revenue by 2030, a year earlier than previously forecast.
Musk's pledge that SpaceX would only use Nvidia processors for its AI infrastructure sent the chipmaker's shares up more than 3%. "We're exclusive to Nvidia," he said. Nvidia's Alpha Score stands at 76, labeled Strong, reflecting its dominant position in AI chips. NVDA stock page
AMD was on the other side of that trade. CEO Lisa Su brushed off the snub. "I have tremendous respect for Elon... we look forward to continuing to partner over the longer term," she said. AMD's stock closed 7% lower despite strong second-quarter earnings and guidance for data center growth "well over 100%." The company's Alpha Score is 51, rated Mixed. AMD stock page
Meta is rolling out Muse Code, its first coding agent, as it tries to challenge Anthropic and OpenAI. The company is differentiating by price rather than capabilities, per AI chief Alexandr Wang. At Google, chief scientist Jeff Dean is leaving after 27 years to start his own company, while DeepMind CEO Demis Hassabis moves to a chairman role. Alphabet shares fell about 4%. The shake-up landed just as Google turned cash flow negative for the first time on record, with full-year capex forecast at up to $205 billion.
Michael Burry of "The Big Short" fame warned of a possible 1987-style crash. "I continue to believe it is possible we are near a major top, and possible a 1987-type fall, but the S&P 500 making new highs likely will bring new money into the market," he said in a Tuesday Substack post. Burry has been among Wall Street's most outspoken skeptics of the artificial intelligence boom. He argued that demand for AI infrastructure is being fueled by financing arrangements that may prove unsustainable.
The market's advance is creating a self-reinforcing cycle, with declining volatility encouraging systematic investors to increase exposure, Burry said. His comments added a note of caution to a week already shaped by geopolitical headlines and central bank signals. The Fed's next rate decision is scheduled for September.
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