Oil Fell 7%. AI Took the Opening.

GOOD MORNING, Monday gave the AI trade the macro backdrop it had been waiting for. Brent crude fell about 7% after President Trump paused a planned strike on Iran and pushed for talks over reopening the Strait of Hormuz, pulling Treasury yields lower and sending the Nasdaq up more than 2%. Then Palantir added the earnings proof after the bell: quarterly revenue jumped 93% and management raised its full-year outlook again. Lower energy costs helped the discount rate. Stronger enterprise AI demand gave investors something to discount.

MARKETS | TLDR

Wall Street started August with a broad rally: The S&P 500 rose 1.48% to 7,600.50, the Nasdaq jumped 2.13% to 25,913.90 and the Dow gained 1.32% to a record 53,178.41 as Big Tech and lower oil lifted risk appetite.
Oil posted its sharpest relief move in weeks: Brent fell 7.0% to $83.77 a barrel and WTI dropped 5.1% to $80.34 after Washington held off on fresh strikes against Iran and sought a deal that could restore more normal Hormuz flows.
Long-term yields eased with the energy shock: The 10-year Treasury yield fell to roughly 4.66%, giving long-duration growth stocks another tailwind as investors priced a lower near-term inflation impulse from oil.

MACRO RELIEF

Oil Fell 7%. Tech Got Its Discount Rate Back.

Brent crude fell $6.35 on Monday to settle at $83.77 a barrel, its lowest close in three weeks, while WTI dropped $4.33 to $80.34. The move followed President Trump's decision to hold off on a new attack against Iran while pursuing talks aimed at ending the conflict and reopening the Strait of Hormuz. The S&P 500 rose 1.48% and the Nasdaq gained 2.13% as the oil move fed directly into lower inflation and rate expectations.

That matters because energy has been one of the clearest macro constraints on the AI trade. Higher crude pushes up gasoline, freight and input costs; those pressures feed inflation expectations, which in turn keep Treasury yields elevated. When oil falls sharply, the same transmission works in reverse. Long-duration technology stocks benefit because the discount rate applied to future earnings falls even if the companies themselves have not changed.

The relief is still conditional. Iran said Monday there were no formal talks under way with the United States, contradicting Trump's description of the diplomatic process. Physical flows through Hormuz had also not returned to normal. Markets were therefore pricing a higher probability of de-escalation, not a completed settlement. Monday showed how powerful that probability shift can be; the next test is whether shipping data actually confirms it.

ENTERPRISE AI

Palantir Just Put Real Revenue Behind the AI Software Trade

Palantir reported second-quarter revenue of $1.94 billion, up 93% from a year earlier and above Wall Street expectations. The company raised its full-year revenue forecast to $8.150 billion to $8.158 billion from a previous range of $7.650 billion to $7.662 billion, while third-quarter guidance also came in ahead of estimates. Shares jumped about 14% in extended trading.

The numbers matter because Palantir sits closer to the application layer than the chipmakers and hyperscalers that have dominated the AI trade. Investors have spent much of the past year asking whether enterprise AI pilots can become scaled production systems with recurring budgets. Palantir's U.S. government revenue rose 90%, while its commercial business continued to expand quickly, giving the market a concrete example of AI software moving from experimentation into paid deployment.

The caveat is valuation and geography. Palantir's growth is heavily concentrated in the United States, and the company still faces resistance in parts of Europe over dependence on American technology. After a large share-price run, execution expectations are also extremely high. But the report adds an important second leg to the AI thesis: infrastructure spending is not the only thing growing. Some application companies are beginning to convert that infrastructure into fast-scaling revenue.

HEADLINES

Amazon enters the $3 trillion club: Shares hit a record after AWS posted its strongest cloud growth in more than four years and Amazon raised its capex outlook, showing investors are still willing to reward enormous AI spending when revenue acceleration is visible.
U.S. manufacturing hits a four-year high: ISM's July Manufacturing PMI rose to 55.6, the strongest reading since May 2022, with new orders and employment expanding — a reminder that the economy remains resilient even as markets hope for easier inflation.
AstraZeneca investors reject the logic of a megadeal: AstraZeneca fell about 9% after reports of preliminary merger talks with Bristol Myers Squibb, showing that scale alone is not enough when shareholders see integration and antitrust risk exceeding the strategic benefit.
The manufacturing rebound still carries an Iran caveat: ISM respondents cited Hormuz restrictions, transportation problems and price volatility as ongoing risks, meaning Monday's oil relief has not yet removed the supply-chain effects already moving through factories.
Palantir's after-hours move resets the software conversation: The stock's roughly 14% jump after earnings showed that software can still earn an AI premium when investors see revenue acceleration rather than just new product announcements.

UPCOMING

JOLTS — August 4: Job openings will provide the next labor-market signal ahead of Friday's payroll report and help determine whether lower yields can persist.
SpaceX earnings — August 4: The company's first quarterly report as a public company will test whether rapid AI- and data-center-related investment is translating into enough revenue to justify the capex.
AMD earnings — August 4: AMD will provide the week's clearest competitive read on AI accelerators and whether customer wins are translating into faster data-center growth.
July payrolls — August 7: The employment report is the week's main Fed catalyst. Strong hiring could push yields back higher; a softer print would reinforce Monday's rate-sensitive rally.

DEEP INSIGTHS

Palantir Q2: Enterprise AI Moves Into Production

Read this for a concrete counterexample to the argument that enterprise AI remains stuck in pilot projects. Revenue grew 93%, guidance rose materially and both government and commercial demand accelerated, showing how application-layer AI can translate into recurring revenue when deployments become mission-critical.

ISM Manufacturing PMI — July 2026

The report is useful for understanding the growth side of the macro setup. Manufacturing reached its strongest level since 2022, but panel comments still highlighted transportation, tariffs and Iran-related supply risks. It explains why equities can rally on stronger growth while the Fed still has to watch whether those same supply pressures keep inflation elevated.