• Iran: Treasury Secretary Scott Bessent declared that the US and Iran are close to a deal to open the Strait of Hormuz, which would include allowing commercial ships to transit without paying a toll.
• Stocks: Hopes of peace sent indexes flying, with the Dow soaring over 900 points to a new all-time high, while the S&P 500 also climbed to a new record close during its best day of trading since April.
• Commodities: Crude prices collapsed, with both WTI and Brent, the international benchmark, falling below $80 per barrel.

Consumers

Morning Brew Inc, Photos: Adobe Stock

They call this the “little treats economy,” where financial insecurity has given rise to purchasing small luxuries that make you feel better. Hey, if you can’t afford a house, maybe you can afford that new Labubu doll and still get the same rush of dopamine.

Fast food used to be that one of those small, inexpensive treats—but inflation and creeping menu prices have come to bite the world’s biggest burger chain in the buns. Meanwhile, tariff upheaval has given way to stability for one online retailer that lets you spruce up your studio apartment without breaking the bank.

We’re knee-deep in earnings season, so let’s check in on two very different companies that just reported this morning and see how consumers are feeling about them.

McDowner

McDonald’s is still seeking a turnaround after years of slowing spending among consumers who have been hit hard by inflation; particularly low-income customers. The company rolled out a boatload of promotional menu items to entice people back to the Golden Arches, but it backfired: CEO Chris Kempczinski said too many new offerings slowed operations, increased wait times, and lowered customer satisfaction last quarter.

McDonald’s managed to beat EPS estimates in Q2, but revenue fell short. It didn’t help that US same-store sales rose just 0.8% last quarter, a serious slowdown since early 2025. It’s no wonder Ronald McDonald is putting the pedal to the metal: The company announced that Skye Anderson will shift from her role as head of McDonald’s global business services and take over as president of its US business.

Her job is to “bring focus and urgency” to the company’s biggest business segment and turn things around. Shareholders seem skeptical: The stock rose just 1.12% today.

A way fair price

The rough housing market is keeping people focused on making their current living conditions as cozy as possible. That’s been great for online furniture retailer Wayfair, which today touted its strongest quarter over quarter earnings growth since 2020. “In fact, revenue growth in the US was the best we’ve seen in the entire post-COVID period, with nearly 9% year-over-year revenue growth, continuing the high single digit share spread we’ve held since last fall,” wrote CEO Niraj Shah.

But it’s not just cost-conscious customers boosting Wayfair’s bottom line. The company’s Perigold business, which focuses on taking luxury items out of showrooms and putting them on the internet, has proven a huge success with high-income shoppers. Revenue from Perigold has surged by double digits every year since it launched in 2017, and last quarter sales climbed a whopping 35% year over year.

It’s no wonder shares soared 29.97% today.

Americans be shopping

Consumers are okay with spending so long as it helps them feel good. Burgers that cost an arm and a leg are quickly getting cut from the budget, while people are springing for that new duvet cover if it means they can feel better about their homes. It’s a trend that has come to define the US economy, and one that we’ll continue to see play out over the course this earnings season.—MR

      

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Stocks

🟢 What’s up

• Palantir Technologies surged 29.45% as commercial revenue soared 149%, helping deliver another blowout quarter.
• Caterpillar jumped 5.45% on a second-quarter beat and higher sales outlook, easing concerns about AI infrastructure demand.
• Pfizer gained 1.52% after lifting the low end of its revenue outlook and expanding its cost-cutting program.
• AMD rose 7% ahead of quarterly earnings this evening.
• SK Hynix climbed 8.17% and Sandisk gained 10.84% after unveiling a technical blueprint for a new high-bandwidth flash memory technology.
• Moderna climbed 3.36% after administering the first doses of its Ebola vaccine in an early-stage clinical trial.
• Optical networking stocks soared on reports that the US government will soon ban Chinese optical transceivers. Lumentum jumped 8.92%, Corning added 9.04%, and Marvell Technology gained 12.81%.

🔴 What’s down

• Amazon slipped 2.32% after Jeff Bezos disclosed plans to sell roughly $4.1 billion worth of shares.
• BP fell 4.02% despite reporting a sharp jump in quarterly profit as investors looked past the earnings beat.
• Aptiv declined 16.62% on lower third-quarter and full-year earnings guidance.
• NRG Energy lost 15.48% after adjusted earnings missed Wall Street estimates despite stronger-than-expected revenue.
• Chipotle tumbled 9.72% after it was linked to a salmonella outbreak in Minnesota.

Stat of the day

All the cool kids are doing it

Morning Brew Inc, Photo: Getty Images

We mostly tend to hear from high-powered Wall Street analysts who deign to dribble out a few morsels of investing advice from time to time. Maybe it’s time we started listening to the little guy.

Morgan Stanley published its annual intern survey today, in which 529 of the lowliest employees at one of the world’s most powerful banks finally get to take the mic. Some of the results are to be expected, such as heavy AI usage. 68% of Morgan Stanley interns use an AI tool every day, almost double last year’s 35%—but 61% of respondents are “somewhat or very concerned” about AI replacing jobs in the financial sector.

Some survey answers provide a glimpse into what businesses kids these days love. Apple Pay is the clear winner for interns’ payment preferences, with 82% of them using it at least weekly. Spotify is the most popular music streaming service by a mile (no surprise considering the company’s strong earnings report this morning). But Netflix slipped in the rankings, tumbling below YouTube, Instagram, and TikTok for interns’ streaming preferences.

Remember, the report’s value isn’t just in flipping the usual script—it’s about learning what the next generation of investors, business leaders, and consumers are focused on, and positioning your portfolio accordingly. But whatever you do, don’t run out and get one of those dumb broccoli haircuts that everyone under 30 is inexplicably sporting.—MR

Reader Poll

Economy

Morning Brew Inc, Photos: Getty Images

There have been recent signs that the labor market is holding up. But new data suggests that AI is quietly displacing workers. So, who’s right?

Morgan Stanley estimates that AI has added 15 basis points to the US unemployment rate. That’s a small contribution overall, but it’s up from 10 basis points in December—a 50% increase in AI-related job displacement in less than a year.

The impact isn’t evenly distributed. In industries where companies most frequently discuss AI adoption, unemployment is running roughly 50 basis points above normal, with workers aged 22 to 27 bearing the brunt.

The flip side

AI may be a headwind for some workers, but it’s becoming a major tailwind for the broader economy. Oxford Economics’ Michael Pearce estimates that roughly one-third of recent US GDP growth can be traced back to the AI boom. At its current pace, spending on software, datacenter construction, and computer and communications equipment is running at an annualized rate of roughly $1.5 trillion, up from about $1 trillion two years ago, the Wall Street Journal reported.

All that spending is creating a surge in hiring among blue-collar workers. As tech giants pour billions into datacenters, demand for electricians, carpenters, and maintenance workers has climbed. In fact, Meta, Google, and BlackRock have collectively committed more than $265 million to train workers, and Indeed estimates that datacenter installation and maintenance jobs pay 42% more than similar roles elsewhere.

“This is the largest infrastructure buildout in human history, and that’s going to create a lot of jobs. And it’s wonderful that the jobs are related to tradecraft,” Jensen Huang said at the World Economic Forum in Davos. “In the United States we’re seeing quite a significant boom in this area. We’re talking about six figure salaries for people who are building chip factories or computer factories or AI factories.”

What to watch

Despite AI’s push and pull, the broader labor market isn’t showing signs of cracking.

Today’s JOLTS report was largely a non-event: Job openings held steady at 7.4 million, while hires, quits, and layoffs were all essentially unchanged. It’s another sign that the labor market remains stuck in a “low-hire, low-fire” equilibrium.

Next up is ADP payrolls on Wednesday and the monthly employment report on Friday, both of which should offer a clearer picture of whether AI-driven displacement is beginning to show up in the broader labor market.

For now, one thing is clear: The economic effects of AI are already evident, but the effects on the labor market are just starting to surface.—SY

      

News

• SpaceX has an extreme amount of short interest, but somebody out there thinks the stock could triple this week.
• Wells Fargo is planning to roll out tokenized deposits for corporate and commercial clients, as the bank attempts to sneak ahead of the competition.
• Polymarket’s new fundraising round could value the prediction market platform at $20 billion.
• The chief economist at Moody’s Analytics says the Fed’s decision to hold back guidance could create more volatility during every FOMC announcement.
• Remember the private credit crisis? Blue Owl’s quiet comeback shows that the problems weren’t as bad as investors thought.
• You’re never going to believe this, but Ray Dalio warned that the market is approaching bubble territory not seen since 1929 and 2000.
• Court filings reveal that Capital One shut down hundreds of accounts linked to the Trump administration due to fears of money laundering.

Calendar

Economic reports: We’ve got more labor market news with the ADP private payroll report. Also, we’ll catch a glimpse of how a good chunk of the economy is doing when we get the ISM services reading.

Earnings announcements: Eli Lilly, Novo Nordisk, Sandisk, Western Digital, Disney, Shopify, Uber, AppLovin, CVS Health, MercadoLibre, DoorDash, Occidental Petroleum, eBay, Block, Kraft Heinz, and Figma keep the earnings train on the tracks.

recs

🧠 Trying to find a smart investment amid market madness? Try these 10 high-quality companies trading at a discount.

💰 Worth watching: The Commerce Department just quietly funded seven startups with $874 million in taxpayer money.

🪙 Tokenmaxxing and tokenminning have given way to tokenomics, or measuring how much bang companies are getting for the big bucks they’re spending on AI.

🎓 Meet the college kids running a $12 million real estate investment business.

🤔 Probably not a good sign: The father of the 401(k) says the retirement plan doesn’t work for many middle- and lower-income Americans.

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