The Daily Wrap: Morning Edition - July 07, 2026

The big stories this morning are Microsoft's decision to cut 4,800 jobs to manage costs from its massive AI investments, a $14.5 billion chemical merger by Solstice to target the AI market, and SpaceX's highly anticipated inclusion in the Nasdaq 100 index. Other significant events are moving markets, including a potential $10 billion bid for NAPA that sent O'Reilly Automotive's stock tumbling and a spike in oil prices after a reported Iranian attack in the Strait of Hormuz. Amid these developments, the U.S. services sector shows continued growth with rebounding employment, while individual stocks like Dell and Bank of America experienced notable gains.

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From Phinextra Pro in Tampa, it's Tuesday, July 7th, and I'm Rachel Anderson with the Daily Wrap Morning Edition. Microsoft has announced it is cutting 4,800 jobs, or about 2% of its global workforce. The move includes a significant overhaul of its Xbox Gaming Division, which will see 3,200 job cuts and the divestment of up to 5 studios. While Microsoft says the roles are not being directly replaced by AI, the cuts are seen as a way to manage costs while paying for its massive AI build-out. Shares of Microsoft were down 1.4% on the news. A new note from Morgan Stanley suggests investors may be starting to pivot away from the red-hot semiconductor stocks and toward the hyperscalers like Google and Amazon, who are building the AI infrastructure. The brokerage sees the recent weakness in chip stocks as a sign that the AI rally is broadening out. Dell Technologies got a boost yesterday after the president praised the company, telling consumers to go out and buy a Dell computer. The stock jumped over 3% on the comments. But the biggest AI-related stock story today is SpaceX. The rocket and satellite company officially joins the Nasdaq 100 index this morning, a move expected to unleash a wave of passive buying. JP Morgan estimates the inclusion could draw over $4.3 billion in inflows from index funds that must now own the stock. As the quiet period for its IPO underwriters ends, Wall Street is initiating coverage with broadly bullish views, with Morgan Stanley dubbing the company AI's final frontier. Now to the world of mergers and acquisitions. Honeywell spin-off Solstice Advanced Materials announced it will buy specialty chemical peer element solutions in a massive $14.5 billion cash and stock deal. Solstice says the move will accelerate its exposure to high-growth markets like AI infrastructure, data center cooling, and semiconductor manufacturing. However, investors reacted cautiously, with Solstice shares dropping nearly 13% on the announcement. Shares of O'Reilly Automotive sank more than 6% yesterday. The drop followed a report that the Auto Parts retailer is considering a $10 billion bid for Genuine Parts Co.'s Napa division. Analysts are raising red flags, citing significant store overlap which could trigger regulatory hurdles and major operational differences between the two companies. Bank of America stock hit a record high on Monday as part of a broad rally in the sector. The biggest winner from that move is Berkshire Hathaway, which remains one of the bank's largest shareholders with a stake worth around $32 billion. Oil prices are back on the rise. Brent crude is trading up 1.5% above $73 a barrel this morning. The jump follows reports of an Iranian attack on commercial ships in the Strait of Hormuz. The incident renews concerns about the fragility of the peace talks between the US and Iran and the risk of supply disruptions. The latest data on the U.S. economy points to continued, albeit slower, growth. The services sector, which makes up two-thirds of U.S. economic activity, saw its growth dip slightly in June. However, the report also showed a welcome rebound in employment after three straight months of contraction, suggesting the labor market remains stable. U.S. Treasury yields are ticking up as investors wait for today's trade report. The 10-year was at 4.49%, the two-year yield was at 4.14%, and the 30-year bond yield was at 5%. And now let's check the futures. Wall Street is feeling mixed, with chip stocks trending down this morning. Before the bell, SP futures were down over a tenth of a percent, Dow futures were up over a tenth of a percent, and Nasdaq futures were down around 1%. That's all for your daily rap this morning. I'm Rachel Anderson from FinExtra Pro, turning data into stories.