Five things to know ahead of the stock market opening

Trading review: current reports, trends, indices, stock prices, bonds, currency, commodities, and analyst recommendations. 8:20.

1. Stock market

The trading day is expected to open with a mixed trend, against the backdrop of increasing tensions around the Strait of Hormuz and the jump recorded yesterday in oil prices. President Donald Trump said overnight that the US Navy had cleared the Strait of Hormuz of mines and now holds "100%" control over the maritime passage, with the issue of compensation becoming the new focus of tension between Washington and Tehran. In a conversation with reporters at the White House, Trump said that the US Navy now fully controls the maritime passage. "It is open now," he said, adding that the US is "the only one currently holding control over the Strait of Hormuz." He described the American deployment as a "steel wall" and said that sporadic mine-laying by Iran had not changed this. "They drop a mine every now and then, and we find it," he said.

Trading in Asia is taking place this morning with a mixed trend. The Hong Kong Stock Exchange is down by about 0.7%, the Shanghai Stock Exchange is trading stably, and the Seoul Stock Exchange is climbing by about 1.5%, led by chip giant Samsung, which is climbing by about 5%. In Japan, there is no trading today due to a holiday. At the same time, trading in futures on Wall Street is taking place this morning with slight gains. Futures on the Dow Jones are trading stably, futures on the S&P 500 are advancing by about 0.1%, and futures on the Nasdaq are adding about 0.3% to their value.

In Tel Aviv, dual-listed stocks are expected to return from Wall Street with a total slight negative arbitrage gap of about 0.3%. Tower and Elbit Systems will weaken by about 4% and 2% respectively; Camtek and Ormat will climb by about 2.6%, while Palo Alto and Teva will advance by about 1.6%. Yesterday, after an optimistic opening, trading gradually shifted to declines that intensified towards the close. The Tel Aviv 35 index closed with a decline of only 0.3%, but the main declines were felt in the Tel Aviv 90 index, which fell by 1.7%. The declines were led by the construction index, which fell by about 3.1%. The banking and insurance indices also stood out negatively, with declines of about 2% and 1.6% respectively. The defense index also stood out negatively, with a decline of about 2.1%, mainly due to the fall in Next Vision shares.

Revenues of the manufacturer of stabilized cameras for drones, Next Vision, headed by Chen Golan, rose by 138% in the second quarter and amounted to about 88.2 million dollars. Following the publication of the report, the stock traded with volatility - after jumping by about 6%, it shifted to a sharp decline and even completed a plunge of about 45% from the peak in March and 15 billion shekels in market value. Another stock that drew interest during the trading day is Doral. The renewable energy company Doral reported that it will further increase its position in the US, through an investment of 415 million dollars in cash and an allocation of shares of the Israeli parent company. Thus, the Israeli Doral will reach a holding of 53.3% in the American Doral LLC, compared to 26% just a few months ago. At the beginning of the day, the stock jumped by about 7% following the report, but eventually most of the gains were erased and it ended the day with a gain of less than 1%. Among the 125 largest stocks on the stock exchange, three dual-listed stocks stood out positively - Tower, which jumped by over 9%, Nice, and Palo Alto. On the other hand, in addition to Next Vision, Nayax and Ashtrom fell sharply.

In the earnings season sector, today Bank Hapoalim is expected to publish its financial results, alongside Elbit Systems. Max Stock reported that it concluded the second quarter of 2026 with a 30% growth in net profit to about 36 million shekels. According to the company, revenues in the second quarter grew by about 13% to about 379 million shekels thanks to a growth of about 7% in same-store sales resulting from an increase in the number of transactions, alongside an increase in the average basket, as well as the opening of new branches.

Yesterday on Wall Street, the leading indices closed in negative territory, as pressure in the technology and chip sector alongside an unusual jump in energy prices weighed on the leading indices. Against this backdrop, macroeconomic uncertainty is returning to center stage ahead of the publication of price indices and rising concerns about inflation. The S&P 500 index fell by 0.1%, the Nasdaq index led the declines with a retreat of 0.3%, and the Dow Jones index shed 0.1%. The main story of yesterday was recorded in the commodities market. Energy prices jumped sharply against the backdrop of harsh statements by President Donald Trump against Iran and a demand for compensation, alongside growing doubts on Wall Street regarding reaching an arrangement that would allow the opening of the Strait of Hormuz. The jump in oil boosted the energy sector (XLE) by over 3.3% for its best trading day in about a month, but on the other hand, it weighed on the general stock indices. The rise in energy prices and the fear of an inflationary flare-up immediately affected the interest rate pricing of the Federal Reserve. According to CME Group data, the probability that the Fed will raise interest rates at its meeting on September 16 has returned to above 50% and now stands at 51.7% (compared to only 44.4% on Friday). At the same time, the yield on the 30-year government bond climbed to the 5.25% area, a level close to a 19-year high, and exerted heavy pressure on the real estate sector (XLRE), which fell.

The technology sector experienced a volatile day. On one hand, there was selling pressure and notable profit-taking in chip and optical component stocks, the Philadelphia Semiconductor Index (SOX) retreated by nearly 3% after a jump of over 9% last week, the Photonics & Optics (LYTE) ETF plunged by 7.3%, and Coherent shares fell by over 12% ahead of its reports. Intel fell by about 4%, after Bloomberg reported that it plans to raise 15 billion dollars through a stock offering, while taking advantage of the renewed awakening in investor confidence in the company's prospects against the backdrop of the artificial intelligence and data center boom. Overnight, the agency reported that it even wants to increase the fundraising amount by a third and raise 20 billion dollars.

In the AI sector, developments were recorded in leading companies. Chip giant Nvidia teamed up with the largest asset managers on Wall Street, including Apollo, Blackstone, BlackRock, Goldman Sachs, and KKR, in a massive 500 billion dollar initiative to finance artificial intelligence infrastructure, data centers, and ensure energy capacity. In addition, at Mizuho Bank, they signaled significant growth potential for Broadcom shares thanks to the expansion of custom AI chip supplies to giants like Meta, OpenAI, Anthropic, and Apple. Disagreements were recorded in the market regarding the way forward: the investment house BTIG led by chief analyst Jonathan Krinsky warned that the rally "does not have much juice left to squeeze," and that a comparison to the situation at the end of 2021 indicates a growing risk of a sharp correction ("air pocket") in the broad market. On the other hand, the investment house Evercore ISI and strategist Julian Emanuel estimates that the volatility only strengthens the bullish scenario of the S&P 500 on the way to 9,000 points, and argues that the real FOMO components that characterize a market peak are not here yet. Other stocks that stood out in trading yesterday: Palo Alto jumped against the backdrop of strong demand for protection solutions against AI threats, and received target price upgrades from BTIG and Cantor. Berkshire Hathaway climbed following a 16% jump in operating profit and the acceleration of its share buybacks under Greg Abel. Yesterday it was reported that the famous investor Michael Burry declared that Berkshire Hathaway is no longer an attractive investment in his eyes, following Warren Buffett's retirement from the CEO position.

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2. Bond markets

In view of the renewed rise in oil prices and ahead of the US Consumer Price Index, the yield on the 10-year government bond climbed yesterday by over 4 basis points and crossed the 4.7% threshold; the yield on the 2-year bond climbed by over 3 basis points to a level of 4.24%. At the investment giant Schroders, they point to convertible bonds as a strategic asset in a period of market volatility. This is a debt-raising channel, which a company can convert into shares in times of financial distress. This conversion causes the bond to behave like a stock during trading, but to provide a kind of safety cushion for loan repayment in various scenarios. At Schroders, they define the instrument as an "investment with stabilisers": on one hand, the asset provides a safety cushion ("bond floor") that protects capital during stock market declines; on the other hand, the conversion component allows direct participation in the rally and upside of the stock market. According to the investment giant's economists, this asymmetric profile gives debt investors liquidity and risk hedging without giving up the stock potential. On the Tel Aviv Stock Exchange, 33 convertible bonds are traded, the largest of which belong to renewable energy giants Energix and Enlight in a volume of over 1 billion shekels (together).

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3. Commodity and currency markets

Against the backdrop of the jump in oil prices and a rise in the level of geopolitical tension, the shekel is strengthening this morning against the dollar by about 0.4% and its continuous rate stands at just under 2.99 shekels. The shekel started the week continuing to strengthen against the dollar against the backdrop of the gains at the end of the week on Wall Street. The representative rate was set at 2.998 and this is the first time since mid-July that the representative rate has been set below 3 shekels. Yossi Menashe, founder and co-CEO of Altshuler Shaham Financial Services, estimates: "The shekel is not only affected by what is happening in the US: security developments, the local risk premium, and a change in the activity patterns of institutional investors continue to be significant factors. The level of volatility is expected to remain high."

Oil prices jumped by about 5% yesterday, when the price of a barrel of American oil (WTI) closed at a level of 82.13 dollars and a barrel of Brent oil was set at 87.72 dollars, against the backdrop of growing doubts on Wall Street regarding achieving an agreement between the US and Iran to expand tanker traffic in the Strait of Hormuz. The jump was recorded after President Donald Trump clarified that the US is conducting "only half-negotiations" with Tehran and that he will rely on the maritime blockade to exert pressure, while the Iranian Foreign Ministry spokesman, Esmaeil Baghaei, clarified on the other hand that "as long as the American maritime blockade continues, the conditions required for opening the strait do not exist." The renewed escalation comes at a time when oil stocks in the US Strategic Petroleum Reserve (SPR) have fallen below 300 million barrels - the lowest level since January 1983. Regarding market conditions and the state of passage in the strait, Francisco Blanch, an analyst from Bank of America, told CNBC that "we need to see 10 times more ships passing through the Strait of Hormuz for us to see oil prices returning to normal levels."

The price of gold traded yesterday near a seven-week high, rising by 0.4% to a level of 4,356.79 dollars per ounce (and futures at a level of 4,416.00 dollars), as a result of strong technical momentum, fear of missing out on a rally, and the renewal of massive purchases by the Central Bank of China, which increased its reserves in July at the highest rate since October 2023. This morning, gold futures continue to climb by about 1% and it is trading at a level of 4,460 dollars per ounce. The jump in demand comes following weaker-than-expected employment data in the US and ahead of the publication of the Consumer Price Index (CPI) and Producer Price Index (PPI) this week, which may hint at the Federal Reserve's interest rate path, when the market is now pricing in a 50% probability of an interest rate hike in September. "The technical momentum right now is quite strong for gold in general," noted Bob Haberkorn, a senior market strategist at StoneX to CNBC. "It is cautious trading, alongside purchases by China, the CPI and PPI reports this week, and a kind of fear of missing out on a move back above the 4,500 dollar threshold for now." At the same time, Jim Wyckoff, a market analyst at the American Gold Exchange, added and told CNBC that "the CPI data will be important. Inflation is starting to cool down a bit, with markets expecting a report that will not be too hot, which will lead to gold trading in a horizontal to upward trend in the short term."

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4. Macro

Ahead of the publication of the Consumer Price Index this coming Wednesday by the US Bureau of Labor Statistics, prediction markets present a more optimistic picture compared to the forecasts of institutional economists. Data from the prediction platform Kalshi show that market participants estimate with a relatively low probability a scenario of a "hotter" index than expected, and signal a high probability of continued cooling in inflation pressures. In the general index sector, the consensus forecast of economists surveyed by Dow Jones stands at an annual increase of 3.4% in July, a slight moderation compared to the 3.5% rate recorded in June. In contrast, event contracts derived on Kalshi show that traders give a probability of less than 55% that the annual index will exceed 3.3%, and only a 15% chance that it will stand at over 3.4%. This trend comes following June data, when annual inflation stood at 3.5% (below the forecast of 3.8%), when in a monthly calculation a decrease of 0.4% was recorded in the index - the sharpest decrease in six years, following a temporary retreat in energy prices. A similar trend of expectation gap is recorded also in the core inflation index, which neutralizes volatile food and energy components. While the consensus of Dow Jones analysts predicts an annual growth rate of 2.5% in July (compared to 2.6% in June), traders on Kalshi estimate with a probability of only 47% that the core index will exceed 2.4%, and see only an 11% chance that it will cross the 2.5% threshold. The data to be published on Wednesday will have a decisive influence on the Fed's policymakers. The central bank will closely examine the pace of inflation convergence towards the stability target, and the findings are critical in the upcoming FOMC interest rate discussions in September.

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5. Forecast

JP Morgan Bank is the latest financial institution on Wall Street to update its forecast for the S&P 500 index upwards. Now, the bank sets a target of 8,000 points for the end of the year - an update compared to the previous forecast which stood at 7,800 points. The new target price reflects an upside of about 3% compared to the index's closing level at the end of last week (7,757.64 points). The main trigger for the forecast update is the second-quarter earnings season, which confirmed the main argument of bullish players in the market: the massive investments of technology giants in infrastructure and artificial intelligence developments are not a bubble, but a move with solid economic logic.

The second-quarter results showed outperformance across the market. Out of about 87% of the companies in the S&P 500 index that have reported so far, about 78% beat analysts' profit forecasts. The surprise intensity stood at about 31% above preliminary estimates (and according to the bank, even when neutralizing one-time events, it is an average surprise of about 11%). At the same time, doubts about the return on investment in the AI field are beginning to dissipate. Companies like Alphabet, Amazon, and Microsoft showed improvement in cloud service growth, expansion of order backlogs, and growth in operating cash flow. Dubravko Lakos-Bujas, head of global market strategy at JP Morgan, explicitly addressed the issue in his review for clients: "Although free cash flow is expected to remain negative in the 2027 fiscal year for most of the large cloud players, demand and order coverage are improving relative to capital expenditures, as reflected in the increase in the ratio between order backlog and capital expenditures and in the book-to-bill ratio."

Lakos-Bujas added that "this trend suggests that commercialization may accelerate at a faster pace than expenses, which is expected to support stronger revenue growth in the future and further reduce concerns regarding the return on invested capital." Following the results, the strategist also updated the earnings per share forecasts for the S&P 500 index. For 2026 - the profit forecast was updated to 365 dollars per share (annual growth of 35%). For 2027 - the profit forecast was updated to 420 dollars per share (annual growth of 15%). The forward P/E ratio was left unchanged at a level of about 20, against the backdrop of an interest rate environment that may remain high, geopolitical uncertainty, and unprecedented volumes of debt and equity offerings that the market will be required to absorb. JP Morgan joins a series of leading investment houses that have recently updated their forecasts upwards, including CFRA which updated the target to 8,050 points, and UBS which set a target price of 8,100 points. These updates position these entities as the most bullish on Wall Street, at a time when the leading index is trading near all-time high levels.