Day eight of the Iran war as earnings week begins

Good morning. US markets were closed on Sunday, but the news was not. The US struck Iran for an eighth straight day, and an Iranian missile and drone attack on an air base in Jordan killed two American troops and left one missing. Oil rose and US stock futures slipped on the news.

Last week was dominated by the AI shock from China. Fear that Moonshot AI's Kimi K3 threatens the US lead sent the Dow down almost 400 points on Friday, and the chip index now sits about 20% below its late-June level. Even the $8.6 billion CXMT IPO in Shanghai saw cooler demand after the chip selloff. Wall Street is split on whether this is a bubble bursting or a brief dip.

Three things to watch this week. First, earnings from Alphabet, IBM, Intel and Tesla, where the key question is future capital spending rather than profit. Second, the Treasury is ramping up short-term bill sales to about $90 billion, which can drain cash from markets. Third, PMI business surveys in the US and Europe and the European Central Bank's rate decision.

Inflation is pulling in two directions. June consumer prices came in cooler than expected, but oil has risen nearly 20% in July, which some say has erased that relief. A former Fed official argued the central bank should keep a hike on the table because services prices are still high, and the market has not ruled out a hike this year.