Record Highs Meet a Hormuz Standoff: This Week in the Market

This article is educational only and does not recommend buying, selling, or avoiding any security.

A strong year, then two steps back

The S&P 500 has been on a strengthening run for most of 2026. The index returned 10.2% in the first half of the year, through June 30, and July mostly held those gains rather than adding to them: US equities stayed roughly flat for the month, with energy stocks the standout performer as oil prices rose on the same Middle East tensions still making headlines today. The Federal Reserve, meanwhile, held its policy rate steady at 3.50% to 3.75% for a second consecutive meeting in July, waiting on more inflation data before its next move.

That flat stretch broke to the upside in early August. The index climbed from 7,483.23 at the start of July to a record close of 7,757.64 on August 7, its strongest week since April, with the Nasdaq Composite up 5.2% that week. More recently, the run has hit some turbulence: the index has given back ground over its last two sessions, most recently closing at 7,728.20, a 0.32% decline, with the Nasdaq Composite down 0.60% to 26,445.45 and the Dow off 0.34% to 53,791.85. Small caps have held up better than the broader market through the pullback, a sign it isn’t hitting every corner of the market evenly. The 10-year Treasury yield has also ticked up a few basis points (a basis point is one-hundredth of a percentage point) to 4.7334%, as rising oil prices feed into inflation concerns.

Two broader forces are behind the shift from a months-long rally to a pullback: a geopolitical standoff in the Middle East that has weighed on energy markets since at least July, and a single AI-infrastructure financing deal that’s rewarding some companies and leaving others behind, even within the same theme.

S&P 500 — 2026 year to date

Monthly close, S&P 500 (^GSPC), through this month's record and pullback. Source: Yahoo Finance, Investing.com historical data.

The Hormuz standoff: same story, conflicting signals

The Strait of Hormuz, the shipping corridor that carries a significant share of the world’s oil supply out of the Persian Gulf, is back at the center of market attention. A senior Iranian official said Tuesday that the strait won’t reopen until Tehran’s conditions are met by Washington, which deflated hopes for a deal that had been building through the week.

Those hopes weren’t uniform even within Tuesday’s news cycle. Earlier in the day, one report cited Pakistan’s foreign minister saying the US and Iran were close to an agreement, before the more downbeat comments from the Iranian side later Tuesday appeared to reverse that optimism. Reporting on where the talks actually stand has moved quickly and, at points, in different directions on the same day. That’s worth naming plainly rather than picking whichever version sounds more decisive.

What isn’t in dispute is the price reaction. Oil moved higher: US crude (West Texas Intermediate) closed up 1.3% Tuesday at $83.20 a barrel, and the international Brent benchmark gained about 1.4% to $88.91. Oil prices are up more than 6% for the week as hopes for reopened shipping through the strait have faded. Energy was Monday’s best-performing sector on the broader market, up 4.66%, the most direct read on how that oil move is showing up in stock prices; a sector snapshot like that shifts day to day as fast-moving as this story has been. That’s the mechanism connecting a shipping-lane dispute half a world away to a US stock market pullback: higher oil raises input costs across the economy and adds to inflation expectations, which is part of why Treasury yields and stock prices both moved this week.

Same AI theme, different verdicts

Nvidia’s announcement that it’s partnering with six large asset managers to help arrange more than $500 billion in financing for AI data centers and computing infrastructure was this week’s other major storyline, and it split the market into clear winners and laggards, even among companies tied to the exact same news.

The financing partners moved first and moved the most. Blackstone rose 4%, and Apollo and KKR each gained more than 6%. Put simply, these firms aren’t the ones spending the $500 billion on chips and buildings; they’re helping arrange the financing behind it, a role that carries a different risk profile than the capital spending itself. Nvidia, the company actually named in the deal, closed roughly flat. Jabil, a circuit-board maker, rose 5% on a separate UBS upgrade that cited a multiyear AI-driven growth cycle. Riot Platforms, a crypto miner that also leases out AI computing capacity, jumped nearly 20% after beating second-quarter revenue estimates ($174.2 million against a $154.3 million consensus estimate, the average forecast among analysts covering the stock) and announcing a new 191-megawatt data center lease with an unnamed AI lab.

Not everyone tied to the AI buildout had a good week. Intel upsized a common stock offering from $15 billion to $20 billion to help fund its own AI computing buildout, and its shares fell slightly on the news. Issuing more shares to raise cash is called dilution, because it spreads a company’s future earnings across a larger share count, which can shrink the value of each existing share even when the underlying business is doing what it says it will. Meanwhile, Alphabet fell roughly 3.6% to 3.8% (sources differ slightly on the exact figure) and AppLovin dropped nearly 6%, the latter after Bank of America downgraded the stock to neutral and cut its price target to $400 from $430, citing rising risk to AppLovin’s revenue growth forecast, its own outlook for future sales. Neither decline was primarily about Tuesday’s AI-financing news; they were separate, company-specific stories that happened to land on a day the broader tech sector was already under pressure. On Holding, the athletic apparel company, also fell sharply after missing revenue estimates.

The pattern is the same one this space has pointed to before: “AI stock” describes a headline, not a single outcome. A financing partner, a chipmaker, a leasing company, and a search engine can all sit under that label in the same week and still get four different verdicts from the market, for four different reasons.

What’s next this week

Investors are watching for the next inflation (CPI, or Consumer Price Index) report, expected later this week, which will factor into how the Federal Reserve thinks about interest rate policy from here. Oil’s move and the Hormuz standoff remain the other open threads: both are described by market participants as live, developing situations rather than resolved ones.

Risk and Context

Geopolitical developments, including the status of the Strait of Hormuz and any related diplomatic talks, are uncertain and can change quickly, in either direction, without notice. Commodity and energy prices, including oil, can be volatile and are influenced by supply, demand, and geopolitical events that are difficult to predict. A single company’s earnings, financing announcement, or analyst rating, including any of the companies named above, does not predict how the broader market, a sector, or an investment theme like AI infrastructure will perform going forward. Concentrating exposure in a single theme, rather than spreading it across many companies and sectors, can mean a portfolio’s outcome depends heavily on how a small number of names perform, even when the broader theme itself has strong fundamentals.

None of this is a signal to act on. It’s a reminder that a label like “AI stock” or “energy story” covers a lot of different businesses with a lot of different exposures, and this week is a fairly clean example of how differently those businesses can perform under the same headline.

For the investor who reads the balance sheet, and the one who just wants to know what happened. Here at VEM, we tailor to both.

A strong year, then two steps back

The Hormuz standoff: same story, conflicting signals

Same AI theme, different verdicts

What’s next this week

Risk and Context

Sources