🚀 Equities rise to start the week

Market Overview
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Year To Date Performances:

1. U.S. equities opened higher on Monday, led by a 608-point (1.1%) jump in the Dow Jones Industrial Average and 0.7% gains across both the S&P 500 and Nasdaq Composite. The market rally was primarily driven by a pullback in crude oil prices—with Brent futures dropping 6.1% to $90.85 and West Texas Intermediate falling 5.8% to $84.16 per barrel—as fighting between the U.S. and Iran paused over the weekend, despite secondary geopolitical friction following a Ukrainian strike on an Iranian vessel in the Caspian Sea. Wall Street faces a pivotal week marked by upcoming megacap technology earnings reports from Apple, Microsoft, Amazon, and Meta Platforms, which will test investor tolerance for sustained AI capital expenditures following Alphabet's recent soft results. Additionally, investors are bracing for the Federal Reserve's upcoming policy announcement on Wednesday, where markets are weighing the possibility of an immediate quarter-point interest rate hike against broader expectations for monetary tightening in September.

2. U.S. Treasury yields fell on Monday as a third consecutive night of paused hostilities between the U.S. and Iran drove energy prices lower and eased immediate inflation concerns. The benchmark 10-year Treasury yield slipped four basis points to 4.639%, while the policy-sensitive 2-year yield dropped roughly two basis points to 4.309% and the 30-year yield fell over four basis points to 5.121%. Markets are now assessing these geopolitical shifts ahead of Wednesday's Federal Reserve policy decision, where the Federal Open Market Committee is widely expected to keep benchmark interest rates steady at 3.75%, alongside key economic updates including June core PCE inflation, quarterly GDP, and durable goods orders.

3. Apple stock is approaching new all-time highs ahead of its Thursday earnings report, prompting unusually bullish activity in the options market as traders position the tech giant to potentially stabilize a broader market slump. Despite broader market weakness and disappointing earnings from peers like Alphabet and Tesla, options traders traded $442 million in call options on Friday compared to $148 million in puts, with options pricing implying a nearly 4% post-earnings stock move—significantly above its 1% historical average over the past year. Investors are increasingly viewing Apple as a defensive play within big tech because it has avoided the massive artificial intelligence capital expenditures weighing on other megacap balance sheets. Heavy open interest in out-of-the-money $340 calls expiring this Friday indicates strong market speculation that the company's financial results will drive the stock past its record high of $335 USD.

   Headlines

   1. Traders are increasingly moving money back into crypto in anticipation of a new cycle forming.

   2. Steve Eisman is expressing doubts about the value of AI stocks.