Market Wrap
Published
The S&P 500 fell sharply as an escalating Strait of Hormuz conflict and a deepening credit scare around AI infrastructure financing hit stocks simultaneously, with energy strength unable to offset a steep slide in technology and high-growth names. The Nasdaq 100 extended its decline through the session, and the Cboe Volatility Index jumped to its highest level in roughly four months.
Crude oil was the clearest beneficiary of the geopolitical escalation. US crude settled at $101.41 a barrel, up $3.44, or 3.51%, and Brent settled at $109.86, up $3.94, or 3.72%, after Iran's army chief vowed the strait would remain closed until Iranian demands are met and a Russian refinery halted a primary unit following an October 15 drone strike. About 400 merchant ships transited the strait over the prior week despite the standoff. The Department of Energy is soliciting an exchange of up to 17 million barrels from the Strategic Petroleum Reserve. Natural gas moved the opposite way, falling after force majeure was lifted on US supply.
Energy and defensive, value-oriented names led gains, with producers tracking the crude rally and defense contractors firm. Technology was the weakest sector by a wide margin, dragged by semiconductors, software and AI-infrastructure-linked names. CoreWeave extended a multi-day slide, with its five-year credit default swaps at a record level and its 2031 bonds trading in the low-80-cent range; short sellers reportedly booked roughly $806 million in paper profit on the prior session's drop. Other cloud and data-center names, along with cybersecurity and biotech, were under heavy pressure. High-beta and momentum factors underperformed sharply while value held up better.
Company News
- Interactive Brokers Group reported Q3 EPS of $0.67, two cents below expectations, on revenue of $1.91 billion, and raised its quarterly dividend to $0.15 per share from $0.0875.
- Alcoa beat Q3 EPS estimates at $1.82 and reaffirmed 2026 alumina and aluminum production guidance, while flagging higher interest expense tied to a recent notes issuance.
- Charles Schwab reported in-line Q3 EPS of $1.69 on revenue of $7.17 billion, below expectations.
- J.B. Hunt missed Q3 EPS estimates by a dime at $1.82 despite revenue above expectations, and disclosed $174 million in third-quarter buybacks.
- Varonis Systems agreed to be acquired by Thoma Bravo-backed Proofpoint for approximately $6.3 billion, or $49.75 per share in cash.
- Semtech raised its fiscal third-quarter sales and EPS outlook on data center demand strength.
- Regions Financial, Truist Financial, Citizens Financial Group and Travelers all topped Q3 EPS estimates, with Travelers beating by $1.69 per share.
- Truist agreed to sell $7.7 billion of unsecured consumer loans from its LightStream platform to Carlyle Group.
- MiniMed Group completed its separation from Medtronic, becoming a fully independent company.
On the data front, September Industrial Production rose 0.7% month over month and Capacity Utilization came in at 76.9%. The Treasury Budget showed a September deficit of $26.9 billion. The US paid a record $1.05 trillion in net interest on debt in fiscal year 2026. Treasury yields rose across the curve following the data, with the 10-year near 5.125% and the 2-10 spread widening to 35.7 basis points.