Hormuz hopes fade, oil jumps and the Dow's streak ends

Good morning. Last night was a reality check. Early on, reports that Iran and Oman were at the final stage of a deal on the Strait of Hormuz lifted spirits. Then Iranian state media published a draft with conditions on passage, oil bounced back, and stocks that had been riding the optimism gave some of it up. The Dow closed lower, ending its record run.

Chips made it worse. Western Digital and Sandisk fell sharply after soft guidance, dragging the sector down. Software names sold off whether their results were good or bad. A first lockup expiry for SpaceX shares flooded the market with supply, exposing how thin demand can be for AI-linked stocks. There were also reports that some Fed officials are starting to ask whether the pace of AI investment is creating risks for the financial system.

On rates, reports that President Trump talks often with Fed Chair Warsh revived questions about the Fed's independence. Governor Cook said she would not rule out a hike if inflation stays high.

That makes tonight's July jobs report even more important. Forecasters expect 83,000 new jobs and an unemployment rate of 4.2%. Many say the details, such as wages and how many people are working or looking for work, matter more than the headline.