The midterm rally that carried the S&P 500 through Wednesday's close is running into a Strait of Hormuz conflict that has moved from blockade to direct attacks on shipping. Overnight brought reports of two tankers and a tugboat on fire, a UKMTO report of a tanker struck by projectiles north of Qatar, and Iran's navy claiming a separate tanker hit a mine east of the strait and caught fire. Yemeni missile attacks also reportedly hit Yanbu, Saudi Arabia, though Saudi Civil Defense says the danger there has passed. The Wall Street Journal also reported covert US strikes inside Iran in recent weeks that the administration chose not to publicize before the midterms.

Despite the escalation, premarket trading shows no broad flight from risk. Applovin is up 16.1% after Wednesday's surge on favorable reporting, and the iShares MSCI EAFE Value ETF is up 9.8%, alongside gains in Albemarle, the VanEck Rare Earth and Strategic Metals ETF, and PDD Holdings. The moves suggest investors are still rotating into value, materials and China-linked names even as the Gulf situation deteriorates.

The losers premarket are more idiosyncratic than geopolitical. Jack Henry & Associates is down 10.7%, Qualcomm down 10.3%, Fair Isaac down 8.6% after Wednesday's drop, Amcor down 8.0% following its guidance cut, and Mercado Libre down 5.5%.

Europe's earnings season is reinforcing a split picture. Handelsblatt reports steep profit declines at Volkswagen, BMW and Mercedes-Benz tied to the EV transition and a collapsing China combustion market, alongside more Bosch job cuts. Against that, Commerzbank posted a record nine-month result, Deutsche Telekom raised its full-year guidance and dividend, and Toyota lifted its annual forecast. Emirates reported a 66% drop in half-year airline profit on Iran-war disruptions and higher fuel costs, even as group profit held near $980m.

Central bank commentary is tilting hawkish. ECB's Zigman says a "rather big chance" exists of a December rate hike, while Schnabel signaled a path back to normal central bank lending without stigma. Eurozone producer prices rose 11.1% year over year in September, above the 10.6% expected, reinforcing the inflation concern underlying that tilt.

The combination points to a market still pricing the Hormuz conflict as a regional energy and shipping risk rather than a systemic one, even as the attacks themselves grow more direct.

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