Iran Tensions Reignite
President Trump declared the tentative ceasefire with Iran effectively over, raising fears that diplomacy is breaking down. His comments, made at the NATO summit, followed a fresh round of US strikes on Iran and a move to block Iranian oil sales after recent attacks in the Strait of Hormuz. Iran responded by calling last month's interim peace agreement ineffective. The June 17th memorandum of understanding had led many to expect a quick, linear resolution with crude falling back below $70 a barrel. Dealing with a country like Iran, that resolution won't come fast. Trump's NATO-summit timing signals he wants broader allied support for the goals of keeping Iran from nuclear weapons and stopping tolls charged through the Strait of Hormuz. The rhetoric may prove stronger than the outcome.
Markets sit on edge. Crude climbed nearly 6% with Brent posting similar gains before pulling back from session highs, trading near $74 and up about 5%, below $75 a barrel and at two-week highs, though off the overnight session lows once the market absorbed Trump's remarks. The 10-year yield ticked up to 4.56% and the dollar strengthened, adding downside pressure. Futures were weak: S&P minis off almost three-quarters of a percent, NASDAQ 100 futures down 1%, Dow futures down nearly 1%, and small-cap futures off eight-tenths of a percent. The market has brushed aside geopolitical tension for months without denting US growth or corporate results, and companies gave no negative guidance tied to a longer conflict. Whether traders buy this dip again is the open question.
Airlines and Cruise Lines Feel the Oil Move
Higher oil pressured Delta, United, American, and Southwest, along with the cruise lines, reversing the upgrades that came when the ceasefire first held. Delta reports Friday morning with its stock just off all-time highs; United sits in the same spot. Crude fell from over $100 a barrel to under $70, and the airlines never cut prices or ran their usual summer sales because demand stayed strong. For most of the reporting quarter, falling jet fuel prices should flow straight to margins and likely produce solid results. Guidance matters: how many flights they cancel, how many they add, and how much pricing power robust demand gives them. The commodity space remains the read for airlines, cruise lines, and other sectors.
Apple Deepens the Broadcom Partnership
Broadcom is expanding its Fort Collins, Colorado facility by about $1.5 billion as part of a deepening tie with Apple, which now includes plans to make some chips in the US. Broadcom draws roughly 20% of its revenue from Apple through Bluetooth, cellular networking, and other chips in Apple products. Apple has to diversify and solidify its supply chain as component prices climb, with memory chips the sharpest pressure point. Apple has already raised prices on iPads and Macs, and the iPhone 18, due this fall, will likely see another increase. The deal locks in pricing and extends the multi-year partnership to 2031. It is expected to exceed $30 billion, making Broadcom the largest US manufacturing commitment to date under Apple's $600 billion pledge to bring production back to the states. Apple settled the prior session just 2% below its all-time high and is closing in on Nvidia for the title of world's biggest company by market cap. The news moved neither stock much.
Alibaba Rallies on AI
Alibaba shares jumped 9% in US pre-market trading after rallying overseas. Ahead of earnings, the company gave analysts an upbeat update: losses in its money-losing instant commerce business narrowed last quarter while overall profitability held steady, welcome after months of heavy spending and price wars with rivals that squeezed margins. Its fast-growing cloud and AI business remains a bright spot. US companies are increasingly adopting Alibaba's AI models as a cheaper alternative to Claude, Gemini, and other domestic options, a boon for the stock. Beijing said it will consider curbing overseas access to its top AI models, which could dampen that enthusiasm. The US currently leads in AI and China wants to take the mantle. Curbs would hurt Alibaba, though the profitability at stake may push Alibaba and other Chinese tech firms to resist that government direction.
