Monday saw all three major US indices close in positive territory. Following the market close, sources from Pakistan's military and Iran's security apparatus indicated to media outlets that the US and Iran have reached a consensus on the terms of a ceasefire agreement, which reportedly includes provisions for freedom of navigation in the Strait of Hormuz. The sources stated, "Consensus has been reached on a ceasefire agreement, including the freedom of navigation clause for the Strait of Hormuz," adding that both parties anticipate making a public announcement in the coming days. According to the sources, the Islamabad memorandum is set to initiate negotiations and a series of technical meetings.
In US equities, the Dow Jones Industrial Average advanced 160.07 points, or 0.30%, closing at 53,577.23. The S&P 500 gained 24.36 points, or 0.32%, to finish at 7,677.22. The Nasdaq Composite climbed 171.11 points, or 0.66%, to end the session at 26,151.30. Shares of SK Hynix and Micron Technology rose over 2%, while NVIDIA (NVDA.US) gained 2.1% and AMD climbed nearly 5%. The Nasdaq Golden Dragon China Index rose 1.1%, with Alibaba (BABA.US) up 0.8%.
Across European markets, Germany's DAX30 gained 155.76 points, or 0.60%, to 26,274.75. The UK's FTSE 100 added 33.60 points, or 0.31%, to close at 10,887.92. France's CAC40 slipped 13.81 points, or 0.16%, to 8,439.20. The Euro Stoxx 50 rose 10.77 points, or 0.17%, to 6,458.75. Spain's IBEX35 fell 33.01 points, or 0.16%, to 20,065.59, while Italy's FTSE MIB increased 209.82 points, or 0.40%, to 52,752.00.
In Asian trading, Japan's Nikkei 225 rose 0.5%, and South Korea's KOSPI index advanced 0.68%.
The US dollar index, which measures the greenback against a basket of six major currencies, slipped 0.09% on the day, settling at 98.915 in late New York trading. At the close of New York foreign exchange markets, the euro traded at $1.1674, up from $1.1663 the previous session. The British pound fetched $1.3646, higher than the prior day's $1.3631. The dollar bought 159.22 Japanese yen, slightly above the previous 159.19, and 0.8020 Swiss francs, down from 0.8026. It also traded at 1.3830 Canadian dollars, lower than 1.3850, and at 9.4659 Swedish kronor, down from 9.4973.
In cryptocurrency markets, Bitcoin rose 0.13% to $78,840 at the time of writing, while Ethereum declined over 1% to $2,449.16.
Oil prices saw significant declines. Light sweet crude for October delivery fell $2.65 to settle at $82.36 per barrel, a drop of 3.12%. Brent crude for October delivery decreased $3.59 to close at $88.58 per barrel, down 3.89%.
In precious metals, spot gold was quoted at $4,658.71 per ounce, and spot silver stood at $68.64.
IMF Managing Director Kristalina Georgieva urged governments worldwide to confront escalating fiscal risks, stating that "all countries need to address their fiscal issues and formulate and publish credible plans to ensure debt and deficits remain on a sustainable trajectory." She also called on central banks to remain "highly focused on their price stability mandates." Georgieva noted that while the global economy faces pressure from high inflation and trade tensions, growth supported by AI investment has partially offset these shocks. However, rising bond yields and stalled disinflation indicate a highly uncertain economic outlook. She cautioned that the energy shock stemming from the Iran conflict is not over, with the global economy caught between "negative supply shocks from the Middle East" and "positive demand shocks from AI." She also warned that energy supplies, El Ni帽o weather patterns, and AI's impact on financial stability remain key risks.
Barclays' strategy team cautioned that the rapid expansion of AI infrastructure is triggering backlash among US voters from both parties, potentially introducing political risk into the popular AI trade. "Data center construction is turning AI from an abstract tech story into a concrete cost-of-living issue," the team wrote, noting that even voters with limited engagement with AI are affected by higher electricity bills, water stress, and the impact of industrial facility construction in their communities. Evercore ISI and BCA Research also warned that the power-hungry data center construction boom is becoming a sensitive issue in the midterm elections, with voters increasingly frustrated by rising electricity costs. Barclays believes that regardless of the midterm outcome, the AI trade lacks new upside catalysts and cautioned investors against assuming "rapid AI adoption growth and a permissive political environment can coexist over the long term." The bank's AI data center index, which includes more than 40 companies such as Super Micro Computer, Arista Networks, and Microsoft, may face policy pressure.
Federal Reserve Bank of Boston President Susan Collins stated she currently supports holding interest rates steady, but this stance depends on seeing more evidence of inflation moving back toward the Fed's 2% target. "Maintaining the current target range will require continued evidence that inflation is indeed declining," Collins wrote. "If evidence of sustained disinflation does not emerge, I believe monetary policy should be tightened as soon as possible." She described recent inflation data showing moderate underlying price pressures as "somewhat encouraging," but added that monthly data can be volatile. "Whether the recent improvement is sustainable remains to be seen." Collins noted that restrictive interest rates combined with rising long-term yields should help alleviate some inflationary pressures from strong household and business spending. She added that the impact of earlier tariffs has largely faded, and the effect of higher oil prices on inflation should also begin to diminish.
South Korea's DRAM export prices surged 401% year-over-year in August, according to reports, as AI-driven HBM production squeezes supply of conventional memory. Data for the first 20 days of the month shows DRAM export unit prices reached $92,183 per kilogram, up 401% from a year earlier and approximately 12.5 times higher than the January 2023 low. Goldman Sachs projects the DRAM supply gap will widen from 5.0% this year to 5.9% next year, noting that "HBM for AI servers and high-capacity server DRAM are absorbing limited production capacity, further tightening supply of conventional DRAM." TrendForce estimates that by the end of next year, Samsung, SK Hynix, and Micron's wafer input for HBM production will account for 30% of total DRAM wafer input, yet HBM will only represent about 13% of actual DRAM bit supply. Memory makers warn that AI-driven DRAM and NAND supply tightness could persist beyond 2027. SK Hynix indicated that from a supply perspective, 2027 could become "the most severe shortage year in memory industry history." Goldman Sachs expects the shortage to potentially continue through 2028.
US consumer confidence fell to its lowest level this year in August, as consumers grew more pessimistic about business conditions and the labor market outlook. The Conference Board reported Tuesday that its consumer confidence index declined 0.8 points to 89.4, with the prior month's figure revised downward. Economists had forecast a median reading of 90.2. The report indicated that elevated gasoline prices, overall cost-of-living pressures, and slowing hiring continued to weigh on US households. The survey was conducted between August 3 and 16, a period during which average US gasoline prices hovered above $4 per gallon as escalating US-Iran tensions pushed oil prices higher. The Conference Board's survey showed consumers' views on the current job market improved in August, with the proportion of consumers saying jobs are "plentiful" rising while those saying jobs are "hard to get" fell. The spread between these two readings matched the widest of the year. However, respondents were more pessimistic regarding employment and income prospects over the next six months.
As NVIDIA (NVDA.US) prepares to report earnings, investors are looking beyond just a "beat and raise" quarter, according to Sara Araghi, portfolio manager at Franklin Templeton. Araghi stated that investors need "specific details" on how the company plans to deploy capital, maintain spending programs, and its future roadmap. She noted that NVIDIA trades at approximately 21 times forward 12-month earnings, indicating the market is already pricing in a slowdown in growth. "Growth is about to decelerate, and the market is looking toward next year," she said. Araghi emphasized that NVIDIA needs to demonstrate earnings growth to justify its free cash flow available for investment and share buybacks. She also highlighted that NVIDIA's roughly 75% gross margin is "highly unusual" for a hardware company and will be closely scrutinized amid rising input costs. NVIDIA is offsetting higher memory costs through price increases, with reports indicating server prices based on Vera Rubin and Grace Blackwell architectures will rise more than 15% for early 2027 deliveries.
SpaceX (SPCX.US) plans to construct a $100 billion Starship launch facility on the southern coast of Louisiana, adding a third Starship launch site. The base, located on Pecan Island and covering approximately 125,000 acres, is planned to include five launch complexes, ten launch pads, as well as facilities for propellant production, power generation, vehicle processing, and employee housing. The site will help SpaceX increase Starship launch frequency and support future plans for up to one million data center satellites. Starship will also be used to launch upgraded Starlink satellites, execute orbital data center missions as early as 2027, and carry NASA astronauts to the moon as early as 2028.
Anthropic is expected to tell investors in its IPO filing that its potential revenue opportunity exceeds $30 trillion, surpassing SpaceX's previous estimate of $28.5 trillion. Anthropic is using its "total addressable market" (TAM) to showcase the growth potential of AI, assessing the full scope of work AI models could eventually perform. SpaceX previously described its TAM as "the largest actionable market in human history," with $26.5 trillion attributed to AI opportunities. Anthropic's second-quarter revenue surpassed $11.6 billion, doubling from prior levels. The company's IPO could raise up to $100 billion at a target valuation of approximately $2 trillion, higher than SpaceX's $1.77 trillion at the time of its listing. Plans are still under discussion, with a potential listing expected as early as September or October.
OpenAI announced that its new Jalapeno chip outperformed NVIDIA's (NVDA.US) current product line in testing, highlighting progress in the company's in-house AI processor development. Richard Ho, head of OpenAI's chip business, said the Jalapeno processor led in two areas during testing: AI workload processed per unit of power and speed of response. The tests compared the chip against NVIDIA's GB300, which was the leading product in the public benchmark system used. OpenAI developed Jalapeno in collaboration with Broadcom (AVGO.US), which produces custom chips for numerous clients. The two companies announced their partnership last year and emphasized the processor's development speed in June, noting it was completed in record time.