The United States and Iran exchanged strikes for the first time in a month, sending oil up more than 3% as investors also weighed Fed Chair Kevin Warsh's hawkish Jackson Hole turn from Friday. PG&E collapsed after California lawmakers failed to pass wildfire Liability protection, Aon agreed to buy USI Insurance Services for $17 billion, and US stock futures slipped modestly as August closes out a fifth straight monthly gain for the Dow.

1. IRAN: US Strikes Rocket Launchers on Larak Island as Iran Retaliates in Jordan; Oil Jumps More Than 3%

US Central Command confirmed American forces struck two rocket launchers on Iran's Larak Island inside the Strait of Hormuz on Sunday, the first publicly acknowledged US strike on Iranian positions since late July, after an American official said Iranian soldiers had been preparing to fire mines into the strait. Iranian state media reported Tehran retaliated by striking US military targets in Jordan. President Trump shared AI-generated videos on Truth Social claiming Iran's Kharg Island oil export terminal was being "blown to smithereens," a claim Iranian officials dismissed as laughable and which remains unverified. West Texas Intermediate crude rose more than 3% to above $86 a barrel, while Brent Crude climbed a similar amount to above $91. US stock futures fell modestly Monday, with S&P 500 futures down 0.2% and Nasdaq 100 futures off 0.1%, as investors weighed the flare-up against a month of broad Equity gains.

  • The gap between CENTCOM's confirmed, narrowly scoped strike and Trump's unverified claim illustrates how quickly unconfirmed battlefield claims can move oil markets independent of facts on the ground.
  • Risk note: if Iran targets Hormuz shipping lanes directly rather than a proxy strike on a US base, oil could extend well past $91 before this week's jobs data even print, complicating the Inflation picture Warsh flagged Friday.

2. FED: Warsh's Hawkish Jackson Hole Turn Pushes September Hike Odds to 59.9% From 35.4%; Barclays and UBS Split on Path Ahead

Federal Reserve Chair Kevin Warsh said Friday at Jackson Hole that he remains worried about inflation, noting that summer readings, while better than expected, do not indicate underlying trends have meaningfully improved. The 2 year Treasury yield, most sensitive to policy expectations, jumped more than 12 basis points Friday to settle near 4.354% on the remarks. The CME FedWatch tool now prices a 59.9% chance of a September rate hike, up sharply from 35.4% the day before Warsh spoke. A Barclays economist wrote the hawkish tone makes a 25 basis point hike more likely than not, with the bank's baseline now calling for a second hike in December. UBS Global Wealth Management's chief Investment officer countered that the base case remains unchanged rates this year, arguing sequential inflation data stay consistent with further disinflation. Treasury yields were little changed Monday, with the 10 year at 4.72%, the 30 year at 5.215%, and the 2 year at 4.327%. This week brings ISM Manufacturing PMI and JOLTS data Tuesday, followed by the August jobs report Friday.

  • The 24 percentage point jump in priced hike odds within a single session shows how sensitive markets remain to Warsh's rhetoric even without a formal policy signal.
  • Risk note: a hot August jobs report Friday would compound the hawkish repricing and push hike odds decisively above 60%, while a soft print would force a rapid unwind of the entire post-Jackson Hole move.

3. PG&E: Shares Plunge as Much as 17% After California Lawmakers Fail to Pass Wildfire Liability Protection Before Deadline

PG&E Corporation (NYSE:PCG) shares fell as much as 17% pre-market to $13.83, extending Friday's 7.52% selloff, after California lawmakers failed to pass wildfire liability protection legislation before the session's August 31 deadline, removing a catalyst investors had counted on to de-risk the utility's balance sheet. Wells Fargo cut the stock to equal weight with a $24 target, BMO moved to market perform with a $21 target, and Mizuho downgraded to neutral while cutting its target to $16, writing that investors are better positioned in utilities with fewer wildfire liability issues. UBS was the outlier, maintaining a buy rating with a $22 target, citing progress on a proposed $6 billion liability cap. The decline stands in sharp contrast to peers such as American Electric Power (NASDAQ:AEP) and DTE Energy (NYSE:DTE), which held steady Monday. PG&E has now declined roughly 22% combined since its late July Earnings beat.

  • The divergence between PG&E's collapse and steady trading in its Utility peers underscores that Monday's selloff is a company specific wildfire liability event, not a sector wide repricing.
  • Risk note: if California's legislature does not revisit wildfire liability protection before its session ends, PG&E faces extended litigation exposure that could pressure the stock further into year end.

4. AON/USI: Aon Slips 1.8% Despite $17 Billion All-Cash Deal to Acquire USI Insurance Services From KKR

Aon (NYSE:AON) shares fell 1.8% pre-market to $348.99 after the insurance broker confirmed a definitive agreement to acquire USI Insurance Services from KKR (NYSE:KKR) for $17 billion in an all-cash transaction, one of the largest deals in the insurance brokerage sector this year. Aon said the combination builds on its 2024 NFP Acquisition and will create what the company called the premier US middle market platform. The deal is expected to be accretive to Earnings Per Share by 2028, with roughly $395 million in annual run rate EBITDA impact once integration is complete. Investors appear focused on near term financing and integration costs rather than the long term strategic logic, pressuring shares despite the deal's scale. Aon is already down roughly 5.6% since its late July earnings beat.

  • Aon's second major middle market insurance acquisition in under two years signals a deliberate roll up strategy in a fragmented brokerage market.
  • Risk note: with the deal financed partly through debt, any further rise in Treasury yields following this week's jobs data would raise Aon's financing costs and could delay the EPS accretion timeline.

5. ENERGY: Halliburton, Chevron, and Valero Lead Sector Gains as Oil's Iran Driven Spike Lifts Producers and Refiners Alike

Energy stocks rose broadly pre-market Monday as the renewed Iran conflict pushed oil prices sharply higher. Halliburton (NYSE:HAL) rose more than 2.5%, Chevron (NYSE:CVX) gained 2%, Valero Energy (NYSE:VLO) and Occidental Petroleum (NYSE:OXY) each rose about 2%, and Exxon Mobil (NYSE:XOM) climbed more than 1.5%. The broad based gains span the sector's full value chain, lifting oilfield services alongside integrated majors and independent refiners, consistent with a Supply side geopolitical shock rather than a Demand driven rally. The move tracks directly with WTI's rise above $86 and Brent's climb past $91. Energy remains one of the few sectors trading higher pre-market Monday even as broader Index Futures slipped on the same headlines.

  • Energy stocks rising in lockstep with oil while broader index futures fall shows the market treating this as a sector specific tailwind rather than a broad risk on signal.
  • Risk note: if diplomatic channels reopen quickly and oil retraces the weekend's gains, energy equities that rallied purely on the price spike could give back Monday's gains just as fast.

6. AUGUST WRAP: Dow Set for Fifth Straight Monthly Gain as Nasdaq and S&P Post First Monthly Advance Since May on AI Led Strength

The Dow Jones Industrial Average is up 2.1% month to date, on track for its fifth consecutive monthly advance, while the S&P 500 and Nasdaq Composite are headed for their first monthly gains since May, up roughly 3% and 4% respectively. Technology led the advance, with the S&P 500 tech sector up nearly 6% as Nvidia (NASDAQ:NVDA) climbed more than 8%, Microsoft (NASDAQ:MSFT) advanced 10%, and Micron Technology (NASDAQ:MU) rose 13%. Both the S&P 500 and Dow reached all time highs earlier in August even as inflation fears sent Treasury yields to multi year highs, prompting the Treasury Department to expand its Debt buyback program. In Asia Monday, Japan's Nikkei 225 fell 0.14%, South Korea's Kospi reversed early losses to close 0.46% higher, mainland China's CSI 300 gained 0.35%, and Hong Kong's Hang Seng closed flat. European stocks traded mixed, with the Stoxx 600 near flatline and energy shares outperforming on the oil spike, while UK markets were closed for a public holiday.

  • August's gains arriving alongside multi year high Treasury yields shows equities and bonds have decoupled this month, with AI linked earnings strength offsetting the bond selloff.
  • Risk note: with the Dow's win streak and Nasdaq's rebound resting heavily on AI sector strength, disappointment from upcoming AI infrastructure earnings could unwind a meaningful share of August's gains.

7. PRE-MARKET MOVERS: Pinterest Falls on CFO Departure While GameStop Jumps 4% on Preliminary Results and Deere Gains on Upgrade

Pinterest (NYSE:PINS) shares fell more than 3% after the company disclosed Friday that Chief Financial Officer Julia Brau Donnelly will depart at the end of October, with Vikram Naidu, the company's vice president for finance and Business operations, stepping in as interim CFO. GameStop (NYSE:GME) shares jumped 4% after preliminary second quarter results showed net sales falling on an annual basis even as operating and Net Income were both estimated to rise from a year earlier. Deere (NYSE:DE) rose 1% after Baird upgraded the stock to outperform from neutral, framing the shares as exposure to rising farm equipment demand as farmers benefit from higher crop prices. NASA also launched the Nancy Grace Roman Space Telescope from Florida Sunday, a $4.3 billion project that will search for evidence of dark matter and dark energy roughly 1 million miles from Earth.

  • GameStop's stock rising on improved profitability despite falling sales suggests investors are rewarding cost discipline over Top Line growth.
  • Risk note: Pinterest's Leadership transition landing during a period of broader Social Media ad spending scrutiny could draw heightened attention to guidance before a permanent successor is named.