To The Moon

AI Strength Lifts the Nasdaq While Geopolitics Keep the Rest of the Market on Edge

Tuesday delivered a split‑screen session on Wall Street: enthusiasm around AI pushed the Nasdaq to another record, while the Dow and S&P 500 struggled to find direction.

Index performance:

• $NASDAQ(.IXIC)$ : +0.45% - second consecutive all‑time high

• S&P 500: flat

• Dow: –0.36%

The standout driver was renewed momentum in the AI ecosystem. Meta’s new Muse AI assistant surged to the top of the Apple Store rankings, and major platforms like Shopify and PayPal moved quickly to integrate with it. The speed of adoption is reinforcing the idea that AI remains one of the strongest secular growth engines in the market.

Oil Retreats as Gulf Tensions Shift - But Uncertainty Remains

Energy markets eased after Saudi Arabia successfully restarted its East‑West Pipeline and Iran floated a conditional plan to reopen the Strait of Hormuz. Trump met Gulf leaders at the U.N. General Assembly, but the region’s diplomatic posture is clearly evolving.

Trump’s U.N. speech added another layer of uncertainty. His warning that the U.S. could “annihilate” Iran and his insistence on “peace through strength” effectively shut the door on hopes for a near‑term peace deal. Any diplomatic breakthrough now appears unlikely before the midterm elections.

Sector Snapshot

• Hot Stock: $Monolithic Power(MPWR)$ +8.1%

• Biggest Loser: Gen Digital –6.4%

• Best Sector: Materials +1.9%

• Worst Sector: Financials –2.0%

• $NVIDIA(NVDA)$ $Microsoft(MSFT)$ $Apple(AAPL)$

NVDA

Materials strength reflects easing energy pressures, while financials continue to feel the weight of rising yields and tighter credit conditions.

The Fed’s New Keyword: Persistence

Two regional Fed presidents : Austan Goolsbee and Tom Barkin, offered early insight into last week’s rate decision, and both emphasized a theme that markets will need to internalize: inflation shocks are no longer short‑lived.

Barkin explained that the old playbook of “looking through” supply disruptions doesn’t apply when shocks keep repeating. Goolsbee echoed the point, arguing that recent supply‑side pressures tend to linger rather than fade.

Key takeaways from their remarks:

• Inflation remains more than a full percentage point above target.

• Demand is still solid, meaning policy isn’t yet restrictive enough.

• Businesses report rising cost pressures and more pricing power.

• Services inflation is a critical component to watch; if it firms, the Fed grows uneasy.

Both officials supported last week’s 25‑basis‑point hike to 3.75%–4%, even though neither votes this year. They will, however, be voting members in 2027, and their tone suggests the Fed’s tolerance for persistent inflation is shrinking.

On Deck Today

• Earnings: Cintas, General Mills, Paychex

• PMIs: S&P Global Manufacturing (53.6 expected) and Services (56 expected) Both readings are projected to soften slightly from August, but remain above the 50 expansion line.

These data points will help clarify whether the U.S. economy is cooling gently, or whether persistent inflation risks are becoming more entrenched.

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.

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