Oil Falls on Renewed Deal Hopes: 8 Key Items Shaping the Stock Market Monday

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 positive start to the trading week.

1. Oil fell on an unconfirmed report that Iran had made concessions on its demands over the Strait of Hormuz as diplomatic efforts to end the war in the Middle East continue. (Bloomberg)

President Donald Trump said on Sunday that it is “highly unlikely” he will need to order the US back to war with Iran as long as there is progress in negotiations over Tehran’s nuclear program and reopening the Strait of Hormuz, repeating his assertion five times during an interview with CNN. (CNN)

2. As companies try to keep Wall Street happy in a period of market unrest, their third-quarter results are barely clearing the bar. Most S&P 500 companies’ quarterly earnings are still topping analysts’ estimates. But they’re on track to do so by the narrowest margin in about four years, according to a FactSet report published on Friday. (MarketWatch)

Mentions of inflation on S&P 500 earnings calls have reached the highest level in more than two years, underscoring growing concerns over skyrocketing costs and weakening consumer confidence… Soaring oil prices, which have resulted in blowout results for energy majors, have pushed up the price of fuel, fertilizer, plastic resin and other key raw materials — making it more expensive to fly planes and package goods. Against this backdrop, mentions of “inflation” or “inflationary” climbed to 820 on the earnings calls of S&P 500 companies in October, the highest monthly figure since February 2024. (Bloomberg)

Falling oil prices are lifting equity futures, reducing the impact of the pre-market drop we are seeing in Nvidia (NVDA) shares, and we’ll discuss that next. Back to this latest fall in oil prices, we have three questions. First, is it sustainable? It appears to be the case, but we’ll need to see how the current round of talks progress and as we discussed several months ago when a deal looked close, the final terms will matter. Second, what is the length of time to bring supply levels back to normal? That will help dictate how quickly inflation pressures fade, and with it margin relief for companies as well as the market potentially re-thinking how many rate hikes the Fed may need to deliver.

3. Whether it was stunned silence or the fact that the events occurred over the weekend, many of Wall Street’s biggest firms on Monday have yet to react to the news that Nvidia is conducting an investigation into whether CEO Jensen Huang gave away either company or national-security secrets while conducting an affair. (MarketWatch)

Nvidia shares tumbled on Monday after an internal investigation into whether CEO Jensen Huang had been targeted by a foreign intelligence effort put his future at the AI chipmaker under scrutiny. The internal probe followed a media report that Huang had a close relationship with a Chinese businesswoman who allegedly passed information to Beijing. (Reuters)

The fallout from the above and similar stories over the weekend will see the shares of Nvidia open up on Monday morning in oversold territory. Normally that might tempt some people, but what’s transpired raises many questions, including ones of credibility, what may or may not have been divulged, succession planning, and even what Huang’s future role at Nvidia could be.

4. OpenAI has closed on new funding of $11 billion, the initial part of a round that values the company at $1.25 trillion, a source familiar with ⁠the matter said on Friday. The $11 billion raised so far represents only a portion of OpenAI’s original target of up to $30 billion, while the company’s valuation has come down from the $1.5 trillion level it had ⁠initially sought, two investors said. (Reuters)

We interpret that as reflecting the concerns that fueled last week’s market rout. It also means we’re going to see quite a bit of chatter about Anthropic’s expected IPO offering as the company kicks off its deal roadshow. Last week, the valuation conversation became one with post IPO valuations around $1.2 trillion to $1.3 trillion down from $1.5 trillion and the original target of $2 trillion. Over the weekend figures closer to $1.1 trillion were being discussed. We have to wonder, at what point does the company consider shelving the offering for the time being?

5. US investment-grade corporate bond issuance climbed to $1.88 trillion this year, LSEG data showed, surpassing the previous annual record as Big Tech companies borrow heavily to fund their AI ambitions. The debt issuance this year through November 4 has already breached the previous record of $1.86 trillion raised in 2020 when companies stockpiled cash during the COVID-19 pandemic, driven by near-zero interest rates. (Reuters)

That tally should not be all that shocking to you given the recent deal flow from the hyperscalers and others as they look to address capex funding questions. As we’ve discussed, that deal flow has been oversubscribed. As it relates to Anthropic’s potential IPO, that suggests there will be strong interest in the deal, but as we inferred above, what that price is and where the company aims to price that deal could get very interesting.

6. US networking software and equipment maker Extreme Networks is exploring a sale after attracting inbound acquisition interest, according to people familiar with the matter. The company, which has a market capitalization of about $3 billion, is working with an investment bank on a sale process following ⁠the approach… Potential strategic buyers for Extreme Networks could include cybersecurity provider Fortinet, networking giant Cisco Systems and data infrastructure provider NetApp, among others, the sources said. (Reuters)

In addition to the pace of debt offerings discussed above, M&A activity has continued to chug along and that combination reinforces our view that investment banking fees this quarter are shaping up to be better than feared. Again, the big swing factor will be what happens with the Anthropic IPO.

But we will also want to see what happens between Marvell (MRVL) and Lumentum (LITE). The plummet in both stocks suggests the probability that either a reworking of the deal happens or that the two companies walk away from it are high. We continue to think that if the latter happens, both stocks will move sharply higher. In terms of the above with Extreme (EXTR), we see it as the usual game of musicals chairs that tends to follow a high-profile deal announcement like the one from Marvell and Lumentum.

7. Economic data today per TipRanks: Wholesale Sales (September), Conference Board Employment Trends Index (October), New York Fed Consumer Inflation Expectations (October).

8. Companies reporting today per TipRanks: AM – Barrick Mining (B), CNH Industrial (CNH), Constellation Energy (CEG), Ferguson (FERG), KKR (KKR), monday.com (MNDY), NRG Energy (NRG), RB Global (RBA). PM – AAON (AAON), Archer Aviation (ACHR), AST SpaceMobile (ASTS), Casella Waste Systems (CWST), Hims & Hers Health (HIMS), MARA Holdings (MARA), Occidental Petroleum (OXY), Onto Innovation (ONTO), Plug Power (PLUG), Qualys (QLYS), Rocket Lab (RKLB), Skydance (SKYD), Take-Two Interactive (TTWO), The Trade Desk (TTD).

More Pro Portfolio

At the time of publication, TheStreet Pro Portfolio was long LITE, MRVL and NVDA.