Morning Bid: Dealjà vu

• S&P 500 earnings growth tracking nearly 50% this quarter, but tech stocks like AMD fell 8% post-earnings on AI investment worries despite revenue beats
• Oil refining margins hit extreme levels: Exxon's downstream profits reached $5.5 billion and BP's refining margin rose to $30 per barrel (from $12 a year ago) due to Hormuz supply constraints
• July jobs report expected to show 80,000 additions with 4.2% unemployment; Fed rate hike probability for September dropped to just over 50% from near-certainty weeks ago

Market Summary: Tech Earnings Disappoint, Oil Refining Surges, Geopolitical Tensions Persist

Tech Sector Weakness

Major tech earnings failed to satisfy investors this week despite revenue beats, with AMD plunging on concerns about AI spending sustainability. SpaceX dropped 14% following its first public earnings release, though later recovered, as investor anxiety mounted over massive AI infrastructure outlays. Data storage companies Sandisk and Western Digital also declined sharply despite posting revenue beats.

Strong Corporate Earnings Overall

Aggregate S&P 500 earnings growth is tracking nearly 50% this quarter, according to LSEG data. Notable reports came from pharmaceutical giants, oil majors, and industrial bellwether companies, with results largely impressive across sectors beyond technology.

Oil Refining Profits Soar

Refining margins reached exceptional levels due to supply constraints. Exxon reported downstream profits of $5.5 billion (strongest since 2022), while Chevron's refining profits hit $4.9 billion (highest this decade). BP's refining-indicator margin rose to $30 per barrel from $12 year-over-year. These gains reflect extreme refining capacity shortages caused by Strait of Hormuz disruptions, Iranian attacks on Gulf refineries, and Ukrainian strikes on Russian facilities.

Energy and Geopolitical Developments

OPEC+ members announced plans to increase production by 188,000 barrels per day in September. Brent crude approached $80 per barrel on optimism around interim U.S.-Iran deal prospects, though Houthi attacks on vessels caused modest price increases. Market optimism appears premature given depleted inventories and expanded conflict zones.

Currency and Labor Markets

The yen stabilized around 158 per dollar following joint intervention, recovering from 40-year lows near 164. U.S. labor data showed private employers added 44,000 jobs in July (down from 95,000 in June). Markets now price just over 50% probability of a September Fed rate hike, down from near certainty weeks ago.