THE MARKETS

Tech stocks shrug off oil risk 

Stocks were broadly up in Asia today, especially in the tech-heavy South Korea market, as the Dutch semiconductor company ASML reported better-than-expected quarterly results and raised its guidance. U.S. futures are up this morning after the government reported an unexpectedly tame inflation number yesterday. And the price of oil declined, despite the worsening situation in the Gulf.

• S&P 500 futures were up 0.22% this morning. The index closed up 0.38% yesterday. 
• In Europe, the Stoxx 600 was flat in early trading and the U.K.’s FTSE 100 was down 0.11% before lunch.
• Asia: South Korea’s KOSPI was up 6.24%. Japan’s Nikkei 225 was up 1.49%. India’s Nifty 50 was flat. China’s CSI 300 was down 0.20%. 
• Brent crude was $85 per barrel this morning, down from a high of $87 yesterday.
• Bitcoin was at $64.6K.

Inflation report instantly takes Fed rate hikes off the table

After the U.S. consumer price index (CPI) came in unexpectedly low at 3.5% yesterday, Wall Street became almost unanimous in its view that the Fed will not hike interest rates this year. Here are some of their takes:

• “If you were looking for runaway inflation in this report, you didn't get it.”—Jamie Cox, managing partner at Harris Financial Group.
• “It would be astonishing if the FOMC tightened policy this month after this benign CPI report.”—Samuel Tombs of Pantheon Macroeconomics.
• “The more likely course of action is for the Fed to hold rates steady for a prolonged period, perhaps until the summer of next year.”—ING’s James Knightley.
• This is the report the Fed has been waiting for.”—Jason Pride, chief of investment strategy & research at Glenmede.

What’s driving the S&P 500 right now? One word: Capex.

“We're in an investment cycle unlike anything we've seen before,” according to Ohsung Kwon and his team at Wells Fargo.

MORE FROM FORTUNE

A year after founder Fred Smith’s death, FedEx’s CEO charts his own path - Alyson Shontell

Billionaire Richard Branson says copying his 5 a.m. morning routine won’t make you successful—and will just cause ‘more burnouts than breakthroughs’ - Orianna Rosa Royle

The $124 trillion Great Wealth Transfer is more than just cash: More U.S. businesses are now being inherited than bought, BofA finds - Sasha Rogelberg

‘Close to as good as it gets’: Jamie Dimon just offered another warning on bubbly markets as Wall Street had a monster quarter - Mia Osmonbekov

Mitsubishi takes over $7.5 billion in U.S. natural gas fields from Aethon, deepening Japanese bet on LNG and the AI boom - Jordan Blum

An SEC email address mix-up is causing confusion and threatening to disrupt its proposal to scrap quarterly reporting requirements - Amanda Gerut

IRAN

Trump threatens to bomb Iran’s infrastructure 

President Trump made new threats against Iran yesterday, telling Fox News, "Next week it gets really bad for them," Trump said. "We're going to knock out all their power plants. We're going to knock out all their bridges unless they get to the table and negotiate."

In the last 24 hours, U.S. forces hit dozens of targets on Iran’s Gulf coast. In response, Iran struck U.S. linked sites in Jordan, Kuwait, and Bahrain.

The hostilities came after the president did a swift U-turn on his Monday threat to impose tolls of 20% on cargo transiting the Strait of Hormuz. Instead, he said yesterday on social media, the U.S. will reimpose a blockade on Iranian ships, and demand “MASSIVE” trade and investment deals in the U.S. from foreign shipping companies wanting to use the Strait. 

The Strait of Hormuz is effectively closed, again

Shipping through the Strait fell to a two-month low, according to Reuters. Not a single LNG tanker has made it through the strait since July 11, according to Kpler, the ship-tracking firm.

Iran has managed to sneak some ships through the waterway, however. Nine of the ​11 boats that made it through the strait prior to the reimposition of the U.S. blockade went via the Iran-approved course on the north side, Reuters said. Three of them were empty tankers entering the Gulf. It is becoming more difficult to track shipping as captains turn off their transponders and go dark in hopes of not becoming targets for Iranian drones.

U.S. forces escorted 800 ships through the Strait over the past two months, The Wall Street Journal said. Expect that rate to decline in the coming days.

The U.S. is using up its weapons faster than it is replacing them

The WSJ notes: “The U.S. is facing shortages of interceptors that are critical for knocking out incoming Iranian missiles, making it dicier for Trump to stretch the clock.” Military Watch Magazine says the same thing: It would take a year of production to replace the Patriot air defense missiles expended in the last few months. But because defense contractors are also committed to serving foreign clients, deliveries might not actually happen for four or five years. “The situation is considerably worse when assessing stockpiles of interceptors for the THAAD air defence system, Tomahawk cruise missiles, or GBU-57 bombs,” MWM says.

• See detailed stats on the Pentagon’s weapons supplies from the Center for Strategic and International Studies.

It’s day 138 of the war and no one knows what the endgame is

Notably, the WSJ, the New York Times, and the Financial Times all have heavy analysis pieces on their front pages today, all saying roughly the same thing: Observers can't fathom Trump’s strategy on Iran and can’t see a way out of the conflict for the U.S.

Iran appears to have Trump in perpetual check: The bombing has not worked thus far; the Tehran regime remains in place; Iran has the ability to close the Strait anytime it wants; there is no agreement on curbing Iran’s nuclear program; and the price of gasoline in the U.S. remains a painpoint for Americans.

CHINA MAKES, THE WORLD TAKES

China’s export trade cannot be stopped 

If President Trump was hoping to throw tacks onto the road in front of the Chinese economy, it didn’t work. China's GDP was up 4.3% in Q2, which is considered disappointing over there but in the West would be regarded a blockbuster print. 

China’s exports increased 27% to a 53-month high in June, ING’s Lynn Song said in a note. They were up 19.4% the month before. This chart shows that after a brief hiatus caused by Trump’s “Liberation Day” tariffs, China’s exports to the U.S. have already returned to positive territory:

CHART OF THE DAY

What jobs do illegal immigrants actually do? 

Unauthorized immigrants make up nearly 6% of the U.S. workforce, according to Matthew Martin at Oxford Economics. “But their share of the workforce is at least double the national average in dozens of industries. The private-households subsector is by far the most dependent on undocumented labor; it includes maids, nannies, personal care aides, and outdoor workers such as gardeners,” he said in an email to Fortune.

NUMBER OF THE DAY

22%

The consensus among analysts for year-on-year growth in earnings per share among the S&P 500 in Q2, according to a note from Piper Sandler’s Michael Kantrowitz. In Q1, EPS growth was 21%. Kantrowitz also noticed that analysts have recently become more bullish in their expectations as the year ticks by.

This chart shows how, in the past, analysts would start the year optimistic and then reduce their expectations as the months go by. Now, however, analysts move their estimates upward as we head toward December.

THE FRONT PAGES TODAY

Donald Trump’s return to war with Iran offers no clear path to victory - FT

Current and former employees sue Meta, alleging discrimination in using AI to conduct layoffs - CNBC

Scoop: Trump tells Netanyahu to move forces out of Syria and Lebanon - Axios

Why High Credit Card Delinquencies Aren’t Showing Up at the Big Banks - WSJ

ASML Raises Outlook, Plans Capacity Hike as AI Boosts Demand - Bloomberg

How the Superwealthy Sidestep the Masses to Get to the World Cup - NYT

ONE MORE THING

Apple’s gossip about OpenAI is extremely spicy

If you haven't yet paid attention to Apple’s lawsuit against OpenAI, in which the iPhone company accuses Sam Altman’s people of stealing its corporate secrets, now is the time to treat yourself. Its allegations are explosive. Apple claims one of its ex-employees, Chang Liu, joined OpenAI in January 2026 but failed to return a work-issued laptop. He then exploited a bug in Apple’s security software to use that laptop to download dozens of Apple’s confidential hardware-related files. Apple also claims Liu used a former colleague’s Apple-issued work computer to get into its corporate network.

Both of these acts, it should be noted, are textbook definitions of computer hacking, which is a crime in the U.S. (Sips tea.) OpenAI did not respond to the allegations when reached by Fortune but it has said elsewhere it “has no interest in other companies’ trade secrets.”

To be clear, Apple does not specifically accuse anyone of breaking criminal law in its suit, although it does allege its information was “stolen.” That’s why Elon Musk was dragging Sam Altman on X the other day by suggesting the latter could only visit Musk’s data centers “if your parole officer approves.” 

• Would you like to sponsor this newsletter? Contact Polly Raven (polly.raven@fortune.com) for details.