Oil tests $90 and stocks catch their breath before CPI

Good morning. Wall Street took a step back last night. Talks over the Strait of Hormuz hit an impasse, pushing Brent crude toward $90 a barrel, and the Dow fell about 180 points. It had been up roughly 100 points early on hopes for a Middle East breakthrough, but that optimism faded. The Nasdaq also logged a distribution day, a sign that big investors were selling.

Higher oil rattled bonds too. Government bond yields rose around the world, and Cleveland Fed President Beth Hammack said rates are not restricting the economy enough, so more than one hike may be needed. Weak jobs data had cut the odds of a September hike from 71% to 43%, but tonight's July consumer price report could flip that again.

In AI, the money side is moving to a new stage. The CME said it will launch futures on AI computing power in October, which means compute can be bought ahead or hedged like oil or electricity. There is also talk of Nvidia and big financial firms using AI computing capacity as a kind of collateral for funding.

That has sharpened the warnings. Wells Fargo said its sell-signal gauge is at an eight-year high and urged hedging into CPI. On the other side, Evercore thinks the S&P 500 could reach 9,000 by 2027 if conditions line up. With second-quarter profits up about 50%, the bulls have a solid case too.