U.S. stocks traded lower on Tuesday as investors dealt with a worsening diplomatic impasse between Washington and Tehran while preparing for a closely watched inflation report later this week. The Dow Jones Industrial Average fell about 0.1%, the S&P 500 slipped roughly 0.2%, and the tech-heavy Nasdaq Composite declined around 0.5% as risk appetite weakened for a second straight session.
The retreat came as uncertainty surrounding the Strait of Hormuz pushed oil prices higher and complicated the Federal Reserve outlook. Investors are also reassessing the enormous capital requirements behind the AI boom, with fresh earnings from infrastructure companies expected to offer another test of whether spending remains supported by durable demand.
Market Movers:
- Fermi (FRMI) +20%: Shares jumped after the AI data center developer secured its first binding customer lease at Project Matador, a 15-year agreement with TensorWave expected to generate roughly $6.5 billion in contracted revenue. The 222-MW facility will support tens of thousands of AMD Instinct GPUs, while potential expansion rights could eventually lift the partnership above 650 MW.
- Babcock & Wilcox Enterprises (BW) +15%: Shares rallied after the power-generation equipment company beat second-quarter expectations and raised its full-year profitability target as AI data center demand strengthened. Bookings climbed 38%, backlog surged more than sixfold to $2.6 billion, and management highlighted a project pipeline exceeding $14 billion.
- Sea Limited (SE) +12%: Shares advanced after second-quarter revenue climbed 48.1% to $7.79 billion, comfortably topping expectations as Shopee, Monee, and Garena all delivered strong growth. Adjusted EBITDA also increased, while management reiterated its expectation for Shopee to generate $1 billion in adjusted EBITDA this year.
- Riot Platforms (RIOT) +9%: Shares surged after the Bitcoin miner secured a 20-year, 191-MW data center lease with Anthropic that is expected to generate $9.1 billion in initial contracted revenue. The agreement significantly expands Riot’s AI infrastructure business and lifts total contracted capacity with Anthropic and AMD to 241 MW.
- Plug Power (PLUG) +4%: Shares rose after the hydrogen company delivered better-than-expected quarterly results, brought gross margin close to breakeven, and raised its full-year revenue growth target. Operating expenses fell sharply and cash usage improved, reinforcing management’s goal of reaching positive EBITDA in the fourth quarter.
- On Holding (ONON) -19%: Shares plunged after second-quarter revenue missed expectations and the premium sportswear company lowered its full-year sales outlook. Direct-to-consumer and apparel growth remained strong, but softer wholesale performance and a more cautious forecast raised concerns about the pace of expansion.
- Upwork (UPWK) -11%: Shares fell after the freelancing platform issued third-quarter and full-year guidance that came in well below Wall Street expectations. The weaker outlook overshadowed otherwise solid quarterly results and raised concerns that demand growth is slowing.
- Under Armour (UAA) -7%: Shares declined after Barclays downgraded the athletic apparel company to Underweight, citing a slower-than-expected turnaround and continued competitive pressure. The firm also pointed to limited pricing power, elevated promotional activity, and tariff-related cost pressures as obstacles to a faster recovery.
- Rocket Lab (RKLB) -3%: Shares slipped despite record second-quarter revenue and stronger-than-expected third-quarter sales guidance as investors focused on weaker margin expectations and continued losses. Attention is also turning to execution on the company’s Neutron rocket program, with a key launch-pad delivery targeted for the fourth quarter.
U.S.-Iran Standoff Keeps Oil Elevated
Geopolitical uncertainty remained one of the market’s biggest pressure points Tuesday as hopes for a near-term agreement over the Strait of Hormuz continued to fade. Iranian officials pushed back against restarting negotiations under current conditions, while President Trump signaled that Washington is taking a more restrained approach and allowing economic pressure to build.
Oil prices moved higher as investors assessed the possibility that shipping disruptions could persist. Brent crude hovered around $88 per barrel, keeping energy inflation firmly in focus ahead of Wednesday’s Consumer Price Index report.
Inflation Report Could Reset the Fed Debate
Wednesday’s CPI report has taken on greater importance following last week’s unexpectedly weak July jobs report. The labor market softness reduced some pressure on the Fed to tighten policy, but elevated oil prices and persistent inflation have kept additional rate hikes firmly in the conversation.
Fed officials remain divided over how aggressively to respond. A hotter inflation reading could reinforce the case for another increase as soon as September, while softer data would strengthen arguments for keeping rates steady while policymakers assess whether the recent slowdown in hiring is becoming more pronounced.
AI Infrastructure Faces Another Earnings Test
Investors are also watching the AI infrastructure trade closely as concerns grow around financing requirements and the sheer scale of capital needed to support new data centers. Recent fundraising activity across the industry has renewed questions about whether demand can continue expanding quickly enough to justify aggressive spending.
Upcoming results from CoreWeave and Super Micro Computer should provide another look at server demand, backlog growth, margins, and customer spending. Strong results could help restore confidence in the AI hardware trade, while weaker guidance could deepen concerns that expectations have moved ahead of fundamentals.
Looking Ahead
Wednesday’s inflation report is likely to be the week’s most important market catalyst. Investors will be watching whether price pressures are easing enough to offset concerns about higher oil prices and whether the data changes expectations for the Fed’s September meeting. Markets will also continue monitoring negotiations surrounding the Strait of Hormuz and the next wave of AI infrastructure earnings. With the major indexes still close to record territory, a combination of cooler inflation, stable energy markets, and resilient corporate results may be needed to restart the rally.