Midday Mashup
Published
The twin forces from this morning, an escalating Strait of Hormuz conflict and an unraveling AI financing trade, have both intensified rather than resolved, and the market is now openly pricing in distress on both fronts. The S&P 500 is down roughly 1.1% at midday, a sharp reversal from the modestly higher open, as energy strength can no longer offset a deepening tech rout.
Crude has gone from a Thursday settle near $98 to trading above $100 and touching a session high of $101.02, the most since September 21, as a Russian refinery outage compounds the Hormuz disruption. Iran's army chief vowed the strait will stay closed until Iranian "rights are honored," while reports said US and Israeli forces came away "empty-handed" with assets damaged. Energy is the best-performing sector, up over 2%, with Matador Resources leading at +5.8%, while natural gas moves the other way, falling roughly 5% after force majeure was lifted on US supply.
The AI credit unwind has become the market's dominant stress point. CoreWeave is down 11.9%, extending Wednesday's 15.5% drop that reportedly handed short sellers about $806 million in paper profit. Super Micro Computer (-9.8%), Nebius (-10.2%) and a cluster of software and cybersecurity names are sharply lower, and the Nasdaq 100 has extended its decline to 2%. The VIX has jumped 27% to a four-month high above 21, a clear signal that volatility hedging is accelerating alongside the equity selloff. Moderna is also down over 10%, dragging on Health Care. Indonesia's ETF remains the worst regional mover, down over 14% following MSCI's classification review.
Policy noise added to the churn. Treasury yields rose across the curve after stronger Industrial Production and Capacity Utilization data, with the 10-year near 5.125%. Katie Zacharia departed as White House press secretary after five days, and Trump reiterated plans for a nuclear arms deal with Russia and China while calling the economy "stronger than ever." Tesla shares gave up early gains tied to its Roadster unveiling.
With oil, credit stress and volatility all moving higher at once, the market is treating the Hormuz standoff and the AI financing scare less as separate stories and more as compounding sources of the same risk-off move.