Market Braces for Even Higher Oil Prices: 8 Key Items Shaping the Stock Market Thursday
Meta’s earnings, P&G’s warning and other headlines moving the market this morning.
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These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a very weak start for today’s trading session.
1. The U.S. and Israeli militaries have developed specific plans for renewed strikes against Iran after the American midterm elections, according to U.S. officials and other people briefed on the deliberations… The targets would likely include Iran’s energy infrastructure, nuclear facilities, and missile and drone arsenal. Some officials say one more big round of attacks could push Iran’s economy over the brink and force the country to make diplomatic concessions after nearly eight months of conflict. (NY Times)
As you can likely imagine, the above is sending oil prices higher on Thursday morning with Brent crude passing $111 per barrel, putting it on a path to test and potentially surpass highs reached in March and April. As we saw earlier this year, fighting between the U.S. and Iran drove up energy prices and inflation around the world. What we are seeing in the market on Thursday morning is a combination of the market recalibrating tailwind expectations for both as well as the impact on margins, consumer spending and interest rates.
2. American Airlines forecast a 2026 loss on Thursday, abandoning its previous forecast range that allowed for a profit, as high jet fuel prices outpace fare increases and squeeze margins. (Reuters)
Procter & Gamble on Thursday warned of a profit hit from higher commodity-related costs this year, even as first-quarter sales beat Wall Street estimates, helped by demand for its beauty and home-care products. The Pantene shampoo maker now expects higher raw material, energy and transportation costs to reduce fiscal 2027 profit by about $1.4 billion, up from its previous estimate of $1 billion. (Reuters)
Southwest Airlines reported better-than-expected quarterly earnings and revenue, and progress across its turnaround efforts, but the carrier again lowered its profit outlook because of rising jet fuel costs. (Barron’s)
We will add the above comments from American Airlines (AAL) and Southwest (LUV), which reinforce the downside risk to consensus S&P 500 EPS expectations we’ve been talking about, to the ones we discussed earlier this week from United Airlines (UAL) and Alaska Air (ALK). But it’s the warning from Procter & Gamble (PG) that, in our view, is more likely to catch investor attention as to the real ripple effect of higher energy prices. As we move through the balance of Q3 2026 earnings we’ll continue to collect these data points as well as those about our next item: layoffs.
3. Comcast Corp. is planning a significant number of job cuts as part of an overall restructuring of its cable-TV, broadband and wireless businesses, according to people familiar with the company’s thinking. (Bloomberg)
Barclays Plc is cutting 5,000 jobs to reduce costs through the use of artificial intelligence, the latest large lender to slash its workforce as the new technology ripples throughout the banking industry. The roles are equal to about 5% of the London-based bank’s total headcount, with about 60% of the reductions coming within support functions, including developers. (Bloomberg)
While some of the above likely reflects “right-sizing,” especially at Comcast (CMCSA) where it continues to lose broadband users at an accelerated pace, the move by Barclays (BCS) will rekindle AI related job loss concerns. In the coming weeks and months, as companies grapple with higher costs, we may see more moves like the one at Barclays as companies look to leverage AI and manage costs. And when we think about costs, it’s more than wages. An article in Bloomberg published on Thursday morning pointed out that the annual cost of a U.S. family’s employer-provided healthcare plan reached an average $28,303 this year, 5% more than 2025.
4. Revenue for the quarter reached $64.6 billion, ahead of expectations of $63.3 billion, and up 26% on the year. That represents Meta’s 17th straight quarter of beating sales expectations. Despite the ad business’ maturity, internal deployment of AI for better platform engagement and ad targeting has accelerated the company’s revenue growth in the past year. Revenue guidance for the fourth quarter beat the Wall Street consensus modestly. The company also edged up the midpoint of its capital expenditures guidance for the year. Third-quarter Capex came in below expectations, but that still wasn’t enough to stop free cash flow from going negative… (Barron’s)
We’ll dig far deeper into quarterly results from Meta (META) in a standalone note later on Thursday morning, but for now we’ll share that we liked what we saw with one of the metrics we track closely from the company. That’s the Family Average Revenue per Person (ARPP), which climbed more than 22% year over year. In response, we are seeing Wall Street price targets move higher and we plan on revisiting our META price target as well.
5. Wednesday evening, Tesla reported fine third-quarter results. Automotive profit margins excluding the impact of regulatory credit sales were about 18%, better than Wall Street projected. But operating profit of $718 million, was down 56% year over year, missing Wall Street estimates of about $1.4 billion. (Barron’s)
Still, sales were roughly flat year over year. The company’s AI efforts have yet to yield material growth Tesla’s shares slid 5% in premarket trading on Thursday as the EV maker’s reduced capital spending forecast raised questions about the pace of investment behind Elon Musk’s AI, robotics and autonomous-driving ambitions. The company on Wednesday lowered its 2026 capital spending forecast to about $20 billion from more than $25 billion after spending far less than expected on AI and robotics in the third quarter, which led to a surprise positive free cash flow. (Reuters)
With Trump approaching the second half of his final term and jittery markets threatening the exuberance underpinning Musk’s empire, there’s a push to announce a deal by the first half of 2027 so that it closes during this administration, according to people familiar with the matter. (Bloomberg)
We’ll go along with the comment above that Tesla’s (TSLA) quarterly results were “fine,” but it’s easy to do, seeing as we don’t have a dog in that fight. Rather, as the Portfolio continues to do its work on SpaceX (SPCX) shares, now that Elon Musk has put it out there, we have to consider what a joined SpaceX-Tesla would look like, both good and potentially bad. That includes the increasingly competitive EV landscape as well as the one for autonomous vehicles and robo-taxis.
6. Companies and governments worldwide rushed on Thursday to patch critical flaws in the widely used PHP programming language, as a cybersecurity company reported millions of hacking attempts after the vulnerabilities were disclosed. The push came after governments in Europe and elsewhere took websites offline as a precaution on Wednesday while website operators scrambled to secure systems running the software… PHP developers released urgent fixes on Wednesday for vulnerabilities that had lurked in the software for years until they were uncovered using AI, urging users to “update immediately”. (Reuters)
Major US banks are detecting unauthorized third-party AI agents operating inside customer accounts, with some agents attempting to take actions that appear to be independent of user instructions, Axios reported on Thursday, citing people familiar with the matter. (Reuters)
If it seems like we continue to bang the drum about the interconnected relationship between AI and cybersecurity, you may be right, but nevertheless we will continue to do so. We’ll also continue to voice our view that cybersecurity should be a part of every investor’s portfolio. We recently upgraded our rating and price target for the Portfolio’s position in the First Trust Nasdaq Cybersecurity ETF (CIBR) and the above only brings more support for why we made those moves.
7. Economic data today per TipRanks: Initial & Continuing Jobless Claims (Weekly), CB Leading Index (September), EIA Natural Gas Inventories (Weekly), Kansas Fed Manufacturing Index (October).
8. Companies reporting today per TipRanks: AM – American Airlines (AAL), Blackstone (BX), Comcast (CMCSA), Dover (DOV), Dow (DOW), Honeywell (HON), Lazard (LAZ), Lockheed Martin (LMT), Nokia (NOK), NVR (NVR), Procter & Gamble (PG), PulteGroup (PHM), Ryder (R), Union Pacific (UNP). PM – Bloom Energy (BE), Boston Beer (SAM), Comfort Systems (FIX), Deckers (DECK), Robert Half (RHI), Western Digital (WDC).
At the time of publication, TheStreet Pro Portfolio was long CIBR and META.
