Oil Rises, Bond Yields Climb on Iran Tensions

Dow Jones
Aug 18

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What Happened in Markets Today

Brent crude futures climbed to roughly $91 a barrel Monday after Iranian media said an oil tanker had been seized in the Strait of Hormuz. President Trump threatened to bomb Oman if the country "gets in the way" of U.S. efforts to reach a peace deal with Iran. Iran has taken an increasingly hardline approach to the war in recent weeks, striking several tankers attempting to pass through the strait. Bonds were under pressure, with the 30-year Treasury yield closing at a fresh 19-year high of 5.31%. The 10-year yield ticked higher to 4.725%, up from 4.695% on Friday.

After U.S. retail sales disappointed on Friday, it was China's turn today. A monthly data dump showed the world's second-largest economy weakening on several fronts. China's July retail sales grew just 0.6% year-over-year-missing expectations-on the heels of last week's soft U.S. retail report. Investors are turning their focus to upcoming quarterly earnings from retail giants Target and Walmart to gauge the health of the American consumer.

Chipmakers and AI-related stocks advanced. SpaceX provided a notable bright spot, jumping 4.4% after new securities filings revealed major institutional and individual backers, including Nvidia, Harvard University and Peter Thiel.

Renewed optimism around AI wasn't enough to lift major indexes. The Dow fell 0.5%, Nasdaq declined 0.3% and S&P 500 lost 0.5%.

Markets at a Glance

One Big Story

Each quarter, big tech companies disclose their massive capital expenditures on artificial-intelligence infrastructure, from data centers to chips.

But those figures don't come close to expressing the full extent of future spending to which Google parent Alphabet, Meta Platforms, Oracle and many others have committed. That is because a huge swath of their coming financial obligations aren't reflected on their balance sheets.

Nine top tech companies had some $3 trillion of off-balance-sheet commitments mostly related to AI, according to a Wall Street Journal analysis of footnotes in their most recent securities filings.

What's Coming Up

Home Depot will report quarterly earnings Tuesday.

Housing starts and industrial production are among economic data slated to be released.

Be prepared for the trading day ahead-sign up for Markets A.M.

About Us

Markets P.M. catches you up on the day's most important markets moves, delivered after the closing bell. This email was written by David Wainer for Heard on the Street, The Wall Street Journal's home for financial analysis and commentary. To send us your feedback, reply to this email. Got a tip for us? Here's how to submit.

 

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