Oil slides and the Dow hits a record, but rates still worry

Good morning. Wall Street had a clean rally last night. After President Trump pulled back planned strikes on Iran and pointed toward talks, hopes grew that the Strait of Hormuz would reopen, and oil dropped 5% to 6%. The Dow rose nearly 700 points to a record close. Iran, though, denied that any talks with Washington are under way, so those hopes could still be dashed.

Cheaper oil eases inflation worries and helps rates, and that warmth spread to tech. But long-term yields are not backing down. The 30-year Treasury yield hit 5.28%, its highest in 19 years, and July factory activity was the strongest in four years, yet manufacturers said price swings are worse than during the pandemic, adding to the Fed's headache.

The currency market also made news. With the yen at a 40-year low, the U.S. joined Japan in stepping into the market, the first joint move since 2011. Analysts doubt it can turn around the trend for such a weak currency.

AI sentiment thawed a bit. Amazon's CEO laid out how AI spending will turn into profit, and that seemed to reassure investors. Still, it is worth remembering that chip stocks just had their worst month since 2008.