Groundhog Day for Trump and Iran? 8 Key Items Shaping the Stock Market Monday

These are the early headlines and other items poised to influence the market at the start of trading Monday. As we share this collection of market drivers, U.S. equity futures point to a positive start to the trading week.

1. U.S. President Donald Trump said talks with Iran will happen on Monday but declined to set a deadline for an agreement after earlier saying he had called off an ‌imminent attack in hopes of quickly reaching a deal to reopen the Strait of Hormuz and resolve the impasse over Tehran’s nuclear capabilities. (Reuters) Iran is betting it can outlast Washington by turning the Middle East’s trade routes, shipping lanes and energy infrastructure into pressure points that steadily raise the cost of confrontation, according to Gulf officials and analysts. Rather than seeking a decisive military victory, Tehran is pursuing a strategy of calibrated escalation aimed at widening the conflict without triggering full-scale war. (Reuters) Iran’s foreign ministry spokesperson Esmail Baghaein said at a press conference Monday that Tehran had no plans to hold direct talks with Washington. (CBS News)

While we admit our reference to the famous Bill Murray movie Groundhog Day is a bit cheeky, with the U.S and Iran, we’ve been here a few times now. As such, we are taking a cautious stance on this round of negotiations and our focus remains on the terms as we continue to monitor traffic volumes through the Strait of Hormuz.

However, the market is taking a more hopeful view…

2. Oil fell on Monday, with Brent crude down about 4.5% to just over $83 a barrel, after Iran’s foreign minister, Abbas Araghchi, said discussions between Tehran and Oman over management of the strait are in the final stages. (Bloomberg) Major OPEC+ nations approved the latest small increase to their production quotas, a move that will complete the theoretical revival of supplies halted in 2023 and give them scope to add more barrels once the Middle East war ends. Seven members led by Saudi Arabia and Russia agreed to boost their collective target by a further 188,000 barrels a day next month… (Bloomberg)

We will not complain about falling oil prices, we just want to see the decline be a sustained one not another potential head fake, which is what the June drop in oil looks like with the benefit of hindsight. Incremental production from OPEC+ could take some of the recent pressure off oil prices, but it’s unlikely to significantly push down oil prices due to disruptions related to the war. However, we could see a more pronounced effect in Q4 2026 and 2027 if and when a lasting peace agreement between the U.S. and Iran that opens the Strait of Hormuz is reached.

3. The United States and Japan last week carried out a rare coordinated intervention in foreign exchange markets to stabilize the rapidly weakening yen, marking the first joint operation of its kind in more than a decade. President Trump confirmed on Sunday that the Treasury Department had assisted Japanese authorities. In a statement, Satsuki Katayama, Japan’s finance minister, said the intervention was taken to counter “excessive volatility and disorderly movements” in the yen after months of sustained weakness. (NY Times)

4. Key senators unveiled a short-term spending bill on Sunday that would keep federal agencies funded past the midterm elections and into early December as they look to avoid a government shutdown during the middle of campaign season. The Senate is likely to vote on the measure before leaving Washington at week’s end for its traditional August recess, a period that many lawmakers want to spend shoring up their reelection prospects rather than working in the nation’s capital. (ABC News)

The intervention between the U.S. and Japan, and the short-term funding bill to keep the U.S. government open until December 11 help remove other risks bubbling in the background for the market. Our preference would be to see a longer-term solution to avoid a government shutdown, but rather than talk politics we’ll continue to focus on policy and its impact for the economy, the market, and the Portfolio.

5. This week brings another busy week of earnings in what is shaping up to be another strong quarter for corporate profits. Palantir Technologies, will announce earnings on Monday, followed by Advanced Micro Devices, McDonald’s, Merck, and SpaceX on Tuesday. CVS Health, Eli Lilly, Sandisk, Uber Technologies, Walt Disney, and Western Digital will report on Wednesday, and Airbnb, Constellation Energy, and ConocoPhillips do the same on Thursday. This week’s main economic data release is the jobs report, due from the Bureau of Labor Statistics on Friday. (Barron’s)

If you read Friday’s July Monthly Roundup for the Portfolio, you already know we have another busy week ahead of us. You also know, that following a turbulent July the Portfolio’s year-to-date lead over the S&P 500 remained intact.

Meanwhile, at 9:45 AM ET and 10 AM ET today, we’ll get the July Manufacturing PMI data from S&P Global and ISM. Those learnings will help frame GDP expectations for the current quarter but also give us a peak at what we’re likely to see in next week’s July CPI and PPI data as well as Friday’s July Employment Report.

6. Amazon has completed a $50bn investment in OpenAI, building a roughly 5 per cent stake in the ChatGPT maker ahead of a public listing expected next year… The ecommerce and cloud giant said it would invest a further $35bn if certain milestones, including a public offering or a breakthrough in AI, were achieved (FT)

A few things stand out in the above. First, the mentioned timing for OpenAI’s expected IPO increasingly looks like a 2027 event. While that could change, our view is that would likely help extend the IPO market and therefore investment banking fees that have been a powerful bottom-line driver for companies such as Goldman Sachs (GS), JPMorgan Chase (JPM), and the Portfolio’s Morgan Stanley (MS). Given Amazon’s (AMZN) investment in OpenAI as well as those by Microsoft (MSFT), Nvidia (NVDA) and others in the Portfolio, especially Neostellar Capital (NSLR) we will continue track OpenAI’s IPO timetable closely.

Second, as part of the Amazon investment, OpenAI signed a deal to have Amazon Web Services be the “exclusive third-party cloud distribution provider for OpenAI Frontier, which enables organizations to build, deploy, and manage teams of AI agents.” That led the two companies to expand their previous $38 billion deal by $100 billion over eight years, and explains Amazon’s bullish AWS outlook, AWS’s $486 billion backlog figure and step up in capex.

The Amazon-OpenAI deal also included OpenAI consuming 2 gigawatts of Trainium capacity through AWS infrastructure, which goes beyond existing Trainium chips and includes the upcoming Trainium4, expected to be delivered in 2027. That back’s Amazon’s custom AI silicon chips and brings more color behind the tailwind for Marvell (MRVL).

7. Economic data today per TipRanks: S&P Global Final Manufacturing PMI – (July), ISM Manufacturing PMI (July), Construction Spending (June).

8. Companies reporting today per TipRanks: Open: CNH Industrial (CNHI), Marriott (MAR), Tyson Foods (TSN). Close: Alexandria Re (ARE), Cabot (CBT), Clorox (CLX), onsemi (ON), Palantir (PLTR), Whirlpool (WHR).

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At the time of publication, TheStreet Pro Portfolio was long AMZN, MRVL, MS, MSFT, NSLR, and NVDA.