Good morning, it’s {{current_date_full_with_day}}. Markets are riding two currents at once this morning.

The S&P 500 and Nasdaq just logged their best day since early August, powered by an AI-chip melt-up.

Contracts for US benchmarks were little changed after the S&P 500 and Nasdaq 100 posted their best days since early August At the same time, oil is sliding as shipments through the Strait of Hormuz reportedly hit a six-month high, easing fears of a supply shock.

Oil prices fell after the U.S. claimed shipments through the Strait of Hormuz had reached a six-month high, and concerns about disruptions to Saudi oil shipments eased.

The setup: risk appetite is back on. But this calm is sitting on top of a Middle East truce that's still being negotiated.

In today's newsletter:

Futures are barely moving this morning, digesting Monday's monster tech rally. S&P 500 futures were down 0.08% at 5:30 a.m. ET, while Nasdaq-100 futures fell 0.05%. Dow Jones Industrial Average futures rose 0.04%

What's moving the market: AI stocks, oil, and a truce nobody fully trusts yet.

TODAY’S CATALYSTS

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AMD crossed a $1 trillion market cap Monday as chipmakers ripped higher across the board. Chipmakers Intel and Advanced Micro Devices surged 12% and roughly 10%, with AMD touching a $1 trillion market cap Meta piled on too, jumping double digits on the day. Tech heavy hitters carried the rally, with Meta Platforms surging more than 11%.

This isn't just a chip story. AMD and Intel are proxies for how much hyperscalers plan to spend on AI infrastructure over the next few years.

If that spending keeps accelerating, semiconductors, networking, and power names benefit. If it slows, the AI trade's rich valuations get harder to defend.

What this means for you: Don't just watch earnings. Watch what these companies say about next year's capex. That's the number that actually moves the trade.

WTI crude dropped nearly 4.5% Monday, and Brent fell more than 3%, after reports that tanker traffic through the Strait of Hormuz reached its highest level in six months.

A decline in oil prices fueled the stock market's gains, with West Texas Intermediate crude futures dropping 4.5% to $95.78 a barrel, while international Brent settled more than 3% lower at $100.34 per barrel.

Lower oil takes pressure off inflation and gives the Fed more room to keep cutting. That's part of why yields eased alongside the drop.

But this move is built on diplomacy, not supply fundamentals. That makes it fragile.

If oil keeps falling → relief for consumers and airlines, pressure on energy-sector dividend payers.

If yields keep easing → tailwind for growth and tech stocks, but less income for savers parked in cash and CDs.

If Hormuz talks stall → expect a sharp reversal in both oil and the broader rally.

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The opportunity: Major oil producers are getting cheaper as crude slides on Hormuz optimism.

Why now: Lower oil hurts near-term earnings, but the largest producers still pay substantial, well-covered dividends.

Bull case: If the truce cracks or stalls, oil — and energy earnings — bounce back fast.

Risk: A durable deal, plus rising U.S. production, could keep oil rangebound for a long stretch.

Watch: How WTI reacts to the next headline out of Tehran or Washington.

Markets are pricing in a durable resolution to the Hormuz standoff. Interim agreements in this conflict have unraveled before, sometimes within days.

The two sides have an "in principle agreement" to pursue further diplomacy after an inconclusive initial round of talks.

Watch: Any statement from Tehran disputing progress. That kind of headline has sent oil — and yields — right back up before.

Money rotated hard into chips and mega-cap tech Monday, while energy lagged as oil sold off.

Chipmakers Intel and Advanced Micro Devices surged 12% and roughly 10% That combination — buying anything AI-adjacent while trimming commodity exposure — suggests investors still see more room to pay up for the AI trade, even with valuations stretched.

WTI dropped roughly 4.5% in a single session on shipping data alone — no change in actual production. That's the size of the "peace premium" currently baked into crude.

If diplomacy holds, oil likely grinds lower. If it doesn't, that discount unwinds fast.

Stocks enter today riding an AI-driven rally and a welcome drop in oil, but both are leaning on a Middle East truce that hasn't been finalized.

If diplomacy holds, this setup extends. If it cracks, expect a fast round-trip in oil, yields, and the stocks that just ripped higher.

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