• Stocks: Indexes tumbled across the board after the US and Iran traded attacks yesterday, their first such exchange in weeks. The energy sector was the only portion of the S&P 500 to end the day in the green. Despite the broad decline, all three major averages capped off a decent month of gains.
• Commodities: Oil prices popped after fighting in the Middle East resumed, while gold enjoyed its best month since February.
• Bonds: Longer-dated Treasury yields also climbed thanks to renewed hostilities around the Strait of Hormuz, adding more pressure to stocks.

Earnings

Morning Brew Inc.

As this earnings season winds down, corporate America has plenty to celebrate.

S&P companies delivered a standout Q2, with EPS up 53% from a year earlier and revenue rising nearly 16%, per LSEG. That marked the strongest earnings growth for the index since 2021.

The perfect profit storm

AI, of course, played a big role. The Magnificent Seven posted 118.5% earnings growth in Q2, helped by enormous investment gains at Amazon and Alphabet. Strip out those two companies and the group’s growth rate drops to 43.2%—still impressive, just less bonkers.

Then came the tariff refunds. Companies have received billions of dollars back after tariffs were overturned by the Supreme Court, giving some an instant lift to profits. Abercrombie, for example, received about $100 million in refunds during the quarter, accounting for $1.75 of its $4.17 in EPS. Target received nearly $1 billion, adding $1.65 to its $4.11 in EPS.

And, despite months of gloomy confidence surveys, consumers are helping, too. Dollar General posted its fifth straight quarter of higher traffic, Best Buy saw strong demand for electronics, and companies from Target to Garmin have raised their full-year forecasts.

Energy chipped in, too. Higher oil prices helped the sector post 42.5% year-over-year revenue growth in Q2—the strongest of any S&P 500 sector.

A tough act to follow

All of this sounds pretty great, but whether or not corporate America can keep up this pace is another question entirely.

Bulls argue that AI investment remains strong, consumers are still spending, and corporate outlooks are improving. In fact, nearly twice as many companies raised their profit forecasts for the current quarter as opposed to cutting them—a sharp reversal from a year ago, when downgrades outnumbered upgrades.

Bears, meanwhile, warn that growth this fast rarely lasts. The S&P 500’s trailing four-quarter earnings growth rate has reached roughly 35%, a level exceeded in only about 8% of quarters since 1928. Historically, those bursts of exceptional growth tend to be followed by much slower periods.

And some of Q2’s biggest boosters are inherently temporary: Tariff refunds will run out, massive investment gains won’t reliably repeat every quarter, and energy profits depend partly on oil prices staying elevated.

That doesn’t mean profits need to fall from here. Corporate America could keep making more money even as earnings growth cools in the quarters ahead. Investors might just want to remember an old rule of thumb: Expect a little less, and leave some room to be pleasantly surprised.—SY

      

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Stocks

🟢 What’s up

• Avis Budget Group rallied 6.78% thanks to “dumb luck.”
• SLB jumped 4.83% on a $4.1 billion deal to acquire cooling-systems company Kelvion, expanding the oilfield-services giant’s push into data centers.
• Tesla climbed 5.51% ahead of anticipated self-driving updates, including a pothole-avoidance feature teased by Elon Musk.
• Science Applications International gained 1.79% thanks to an earnings beat and a higher full-year profit and revenue outlook.
• GameStop popped 2.85% after preliminary results showed that its eBay investment is expected to give second-quarter profit a boost.
• Strive soared 11.41% following a $143 million bitcoin purchase that made it the fifth-largest publicly traded crypto treasury.

🔴 What’s down

• Howmet Aerospace fell 7.51% after Elon Musk said SpaceX plans to make turbine blades and vanes in-house, potentially cutting into demand for outside suppliers.
• Aon tumbled 9.53% on its $17 billion deal to acquire rival USI Insurance Services from KKR.
• Eli Lilly declined 1.43% amid plans to acquire biotech firm Merida Biosciences for $2.9 billion in cash, extending the drugmaker’s recent buying spree.
• Pinterest dropped 6.38% on news that CFO Julia Brau Donnelly will leave the company at the end of October.
• Miniso sank 9.97% as investors continued to digest disappointing quarterly results, particularly a sharp deterioration in its overseas business.

Stocks of the day

Fire sale

Illustration: Morning Brew Inc., Photos: Adobe Stock

July 2026 was the hottest month in recorded history—and there may be worse ahead.

In this hemisphere, scientists expect that the El Niño weather pattern—which kicked off this June—will be one of the strongest in living memory, spreading wildfires, torrential rains, and economic upheaval across its path. On the other side of the world, Europe has experienced a severe drought that has ruined crops, brought record-breaking heatwaves, and pushed inflation higher.

It’s no wonder that governments around the globe are bracing themselves for more havoc from climate change—to the detriment of some companies. The California State Assembly just voted against Governor Newsom’s proposal to protect utility companies from wildfire liability, meaning that individuals can seek damages from utility providers whose equipment sparks a wildfire.

It’s a topic that hits close to home for many Californians after last year’s massive fires spread across Los Angeles. And it’s especially painful for utility companies like PG&E, which went bankrupt in 2019 thanks to a deluge of wildfire liability claims. The utility clawed its way back out, but today’s news has Wall Street worried: Analysts across the board downgraded the company, and the stock tumbled 20.06%. Fellow utilities like Edison International lost 23.07%, while Sempra sank 3.1%.

California’s decision, and utility stocks’ selloff, reflect a new reality: The effects of changing climates extend far beyond warmer weather, and investors need to prepare their portfolios while they still can.—MR

Macro

Illustration: Morning Brew Inc., Photo: Bernd von Jutrczenka/Getty Images

Amid trade wars, real wars, and the threat of global inflation resurging, there’s never been a more high-stakes (and awkward) time for the world’s financial leaders to get together for a chat.

Today, the G20 finance summit kicks off in Asheville, North Carolina, and the world’s top suits—including for the first time CEOs like JPMorgan Chase’s Jamie Dimon and David Solomon of Goldman Sachs—are ready to talk shop in what’s expected to be a contentious meeting. It could be especially tough for Treasury Secretary Scott Bessent, who will be busy convincing everyone that the US’s interventionist approach—from boosting the yen to kicking off a new trade war with Canada—is sound financial leadership.

G stands for growth

Bessent’s solution is growth, growth, and more growth. What that practically means, according to Bessent, is deregulation, addressing trade imbalances, and debt restructuring for developing nations.

“The only way for us to get out of this is to grow our way out of it,” Bessent told reporters today.

Meanwhile, investors will be watching a slew of high-stakes policy discussions closely:

• Inflation: Headline inflation is projected to reach 4% across the G20 economies this year. How the leaders think the US should navigate the conflict with Iran, along with combating spiking oil prices, will be hotly debated topics.
• Speaking of Iran: Bessent thanked the EU for signaling support for “Operation Economic Outcast”—the US’s latest plan to slap steep sanctions on Iran. Investors will be watching for whether or not other countries signal that they’re on board too.
• AI: In a two-page letter published today to G20 bankers and finance ministers, Bank of England Governor Andrew Bailey warned that the risk of AI cyberattacks poses a huge threat to the entire financial system.
• Trade: Bessent will try to take attention away from the economic costs of President Trump’s trade wars, and instead present trade policy as a move for the greater good. Bessent will also reportedly ask the members to review their trade terms with China.

Conversations will be even more awkward now that the US has eliminated a slew of smaller working groups focused on issues like energy and the environment. How much that will rustle the feathers of others remains to be seen.

“Washington’s tighter focus may clash with other members who still want to discuss debt relief for developing countries, climate finance and inequality,” explained Deutsche Bank analyst Helen Belopolsky in a note earlier this month. “With a US leadership openly skeptical of the G20’s broader mission, to watch will be how much substantive coordination is feasible.”

Sort of like your college sorority trying to decide on a T-shirt color for this year’s rush season, sometimes even the smallest decisions can become highly contentious.—LB

      

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News

• Today is Tim Cook’s final day as CEO of Apple.
• Mortgage rates just rose to their highest level since June 2025.
• The FTC is suing Amazon for allegedly misleading advertisers.
• OpenAI’s ad business just hit a $1 billion annualized revenue run rate.
• President Trump is reportedly set to announce a new drug pricing deal with nearly a dozen pharmaceutical companies to sell their meds for less.
• American Airlines is rolling out a Trump Accounts matching program.
• Kalshi just issued its first lifetime ban against former GOP Rep. George Santos for illegal trading.

Calendar

Economic reports: All eyes turn to the labor market, with the July Job Openings and Labor Turnover Survey (JOLTS) reading taking the spotlight first.

Earnings announcements: As you read earlier in today’s newsletter, the earnings season has largely concluded—though a few companies like Dell, Nio, and Medtronic are still worth watching.

recs

🏆 Welcome to the winner’s circle: Here are the 22 best-performing stocks for the month of August.

🤖 Forget national sovereignty—Morgan Stanley says “AI sovereignty” is far more important. Here are the five stocks that could pop as high as 20% as governments race to secure their AI pipelines.

🆘 One weird trait all successful people share: They’re willing to ask for help.

⚠️ Monthly dividends sound fantastic—but those frequent payouts come with risks.

📉 Time to bail? Here are the 10 stocks that hedge funds have been selling over the past quarter.

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