Morning Briefing
Published
S&P 500 futures point to a modestly higher open, with the SPY up 0.3% in pre-market, as a sprawling Middle East energy shock dominates every asset class heading into Tuesday's session. The story is no longer just about the Strait of Hormuz: Saudi Arabia's Yanbu Red Sea port has suspended oil loadings after pipeline damage, Libya's National Oil Corporation has halted output at two fields, Russia's diesel export ban extends through October, and US diesel futures settled above $5.26 per gallon at their highest level on record. WTI settled at $105.83, up more than 4%, and Brent closed above $108. Treasury Secretary Bessent attributed rising 10-year yields directly to the oil surge, while simultaneously saying the administration is now ending the Iran threat rather than managing it. Vice President Vance told the New York Post that the conflict will enter a much different phase after the midterms and that the US is not conducting aggressive operations in Iran. The Congressional Budget Office puts the cost of the war at $38 billion in its first five months and adds 0.5 percentage point to its PCE inflation projection for Q1 2027. EU Commission President von der Leyen quantified the damage for Europe at 90 billion euros in additional fossil fuel import costs, using the disruption as political cover to accelerate single market reform, announce a European security council, and launch a new critical raw materials corporation targeting China supply chain exposure.
Wednesday's Federal Reserve decision arrives squarely into this environment, with market pricing near-certain on a 25 basis point hike. The Council of Economic Advisers Chairman Phelan said publicly that hiking would be a mistake, a rare split with Fed pricing. The September Empire Manufacturing index came in at 7.6, well below the 15.0 consensus and down from 20.6 prior, a notable miss that landed without much market reaction given the energy story. Wells Fargo CFO Santomassimo told the Barclays conference that net interest margin could beat Q3 guidance, loan growth will likely exceed full-year targets, and economic activity remains strong.
The pre-market sector picture is bifurcated. Technology leads at +0.7%, pulled higher by semiconductors and storage hardware while software names lag. Intel is up 3.4%, with Lam Research, KLA Corp, and Applied Materials each adding roughly 2%. The semiconductor ETFs confirm the theme, with the iShares Semiconductor ETF up 1.6% and the VanEck version up 1.3%. Energy is the clear laggard at -0.9%, with the broader complex giving back some of yesterday's surge on the large API crude inventory build of 7.1 million barrels against an expected draw of 1.8 million barrels. Financials are marginally positive at +0.1%. J.B. Hunt extends its after-hours loss, now down 10.3% pre-market. The Senate's failure to advance the Clarity Act crypto regulatory bill weighs on crypto-adjacent names. Gold miners are among the commodity standouts, with GDX and GDXJ each up more than 2%.
Company News
- Huntington Bancshares raises its 2026 fee income growth outlook to approximately 32% year over year from a prior range of 26.5-29.5%, while reaffirming loan and deposit growth targets. The company is adopting a more conservative 2027 EPS outlook, citing margin pressure from elevated short-term rates and deposit pricing competition. Shares are down 2.7% pre-market.
- Oscar Health raises full-year 2026 operating earnings guidance to $600-800 million, up $100 million from the prior range, and improves its Medical Loss Ratio outlook by 50 basis points, while reaffirming revenue guidance of $18.7-19.0 billion.
- Corteva's board approved the separation of its seed business into an independent company, Vylor, with a one-for-one stock distribution to Corteva shareholders of record September 24. Vylor is expected to begin regular-way trading on the NYSE under the symbol VYLR on October 1.
- nVent Electric agreed to acquire Maverick Power, a data center power distribution manufacturer, for $1.75 billion with up to $550 million in additional performance-linked consideration. Maverick had revenues of approximately $527 million in the twelve months through June 2026. nVent is up 1.8% in extended trading.
- D.R. Horton authorized a new $5 billion share repurchase program with no expiration date and now expects total fiscal 2026 buybacks of at least $3.25 billion.
- Brookfield agreed to acquire Reliance Worldwide Corporation in an all-cash deal at US$3.38 per share, valuing the plumbing and heating manufacturer at approximately US$2.8 billion enterprise value. Reliance's board unanimously recommended the offer. The deal is expected to close in Q1 2027.
- Dell Technologies completed a $5 billion senior notes offering across four tranches. Shares are up 2.8% pre-market.
- J.B. Hunt is down 10.3% pre-market, extending yesterday's after-hours decline.
- Scholar Rock received FDA approval for ISEMBYLD (apitegromab) in spinal muscular atrophy for patients two years and older already on an SMN2-targeted treatment. The company separately corrected an investor call statement, disclosing that the FDA did require a post-marketing pregnancy safety study.
- Jazz Pharmaceuticals completed its $820 million acquisition of Actio Biosciences, adding ABS-1230, a clinical-stage therapy for KCNT1-related epilepsy, to its pipeline.
- OpenAI is weighing a funding round at a $1.2 trillion valuation ahead of an IPO, according to the Financial Times. The company also explored data center partnerships in Canada, citing its energy resources and the Carney government's AI strategy.
- Google introduced Gemini 3.8 Live and Gemini 3.8 Live Extended Thinking. Altera filed confidentially for an IPO.
- CoreWeave launched a multi-rack Nvidia Vera Rubin NVL72 cluster. Cisco and Nvidia renewed their partnership for Splunk agentic AI. Novo Nordisk and Anthropic partnered to develop medication using Claude AI.
- Otis Worldwide announced that CEO Judith Marks will retire by July 2027, with a successor search underway led by Spencer Stuart.
- 3M's CEO said robust distributor sales growth will persist into Q3 and expects its consumer business to improve in the second half of the year relative to the first.
Overseas Data
Germany's long-bond auction showed softening demand. The 2056 tranche cleared at an average yield of 3.90%, up from 3.64% at the prior sale, with the bid-to-cover ratio falling to 2.4x from 2.9x. The 2047 tranche followed a similar pattern, clearing at 3.88% versus 3.68% prior, with cover dropping to 2.4x from 3.6x. Neither is alarming in isolation, but together they suggest investors are requiring more compensation to hold long-duration European sovereign debt as the energy cost and rate uncertainty picture thickens.
German Chancellor Merz is in active talks with state governments on fuel price relief after Super E10 gasoline hit 2.286 euros per liter and diesel reached 2.412 euros per liter, both near record highs. No specific policy instrument has been selected, with options ranging from targeted direct payments to temporary energy tax cuts and a price cap. Merz separately cancelled his planned New York trip.