Key Takeaways
- S&P 500 climbed 1.5% as cooling Middle East tensions drove oil prices down to $80 per barrel, easing global inflation fears and pushing Amazon (AMZN) to a $3 trillion market cap.
- Palantir (PLTR) shares surged after the company raised its full-year revenue guidance to $8.15B–$8.16B, fueled by a 150% explosion in U.S. commercial revenue.
- U.S. manufacturing activity hit its fastest expansion pace in over four years this July, supported by robust demand and increased hiring across the industrial sector.
- Snap Inc. (SNAP) beat Q2 expectations with $1.60 billion in revenue and grew its daily active user base to 493 million, signaling a recovery in digital advertising.
- Geopolitical relief emerged as Iran suggested progress in negotiations regarding the Strait of Hormuz following the de-escalation of military threats from the U.S.
Market Rally and Macroeconomic Data
Wall Street saw a broad-based rally on Monday as the S&P 500 (SPY) rose 1.5%, moving within striking distance of a new record high. Investors rotated back into megacap tech stocks, marking the group's best performance since March, while Amazon (AMZN) reached a historic $3 trillion valuation.
The rally was supported by a significant drop in U.S. crude oil, which settled around $80, as fears of a major Middle East conflict subsided. Treasury yields fell in tandem with energy prices, reflecting a market that is increasingly optimistic about cooling inflation and a potential "soft landing" for the economy.
Domestic data further bolstered sentiment, as U.S. manufacturing activity expanded in July at its fastest clip in more than four years. Firms reported strong demand and an uptick in hiring, suggesting that the backbone of the U.S. economy remains resilient despite high interest rates.
Tech Earnings: Palantir and Snap Shine
Palantir (PLTR) delivered a "blowout" second quarter, posting revenue of $1.94 billion against the $1.81 billion expected by analysts. The company’s U.S. commercial segment was the primary driver, with revenue soaring nearly 150%. Consequently, Palantir raised its full-year adjusted operating profit forecast to a range of $4.89 billion to $4.90 billion.
Snap Inc. (SNAP) also outperformed expectations, reporting Q2 revenue of $1.60 billion and adjusted EBITDA of $250 million. The social media firm provided an optimistic Q3 outlook, projecting revenue between $1.70 billion and $1.74 billion, as it continues to scale its infrastructure to support its 493 million daily active users.
Mixed Results in Chips and Industrials
ON Semiconductor (ON) reported a solid beat with Q2 revenue of $1.60 billion and adjusted EPS of 74 cents. The company’s Q3 guidance remained steady, with revenue expected to land between $1.65 billion and $1.75 billion, suggesting a stabilizing environment for automotive and industrial chip demand.
In contrast, Whirlpool (WHR) struggled during the second quarter, missing revenue estimates with $3.52 billion in sales. The appliance giant slashed its full-year ongoing EPS guidance to a range of $2.50–$3.00, down from its previous forecast of $3.00–$3.50, citing persistent margin pressures.
Meanwhile, Boeing (BA) received a critical boost as the FAA granted sign-off for the 737 MAX 7. This regulatory milestone is expected to clear the path for long-delayed deliveries, providing much-needed clarity for the aerospace giant’s narrow-body program.
Geopolitical De-escalation
Diplomatic efforts in the Middle East took a positive turn as Iran indicated that negotiations to secure the Strait of Hormuz are making progress. This follows a move by the Trump administration to call off a planned military strike, opting instead for a two-phase diplomatic approach.
The proposed plan involves an initial reopening of the Strait to ensure global shipping stability, followed by a second phase focused on denuclearization talks. While the "on-again, off-again" nature of these negotiations remains a volatility risk, the immediate reduction in tension has allowed markets to focus back on fundamental earnings and labor data.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.