Oil Falls to Pre-War Levels: 8 Key Items Shaping the Stock Market Thursday

These are the early headlines and other items poised to influence the market at the start of trading Thursday. As we share this collection of market drivers, futures point to a positive start to the trading day.

1. Oil prices fell on Thursday to levels last seen before the start of the Iran ‌war as expectations of rising supply from the Middle East outweighed demand concerns… U.S. Energy Secretary Chris Wright told a forum that flows through the Strait of Hormuz were close to those before the start of the Iran war, with at least 20 million barrels ⁠having exited the strait in the last 24 hours. (Reuters)

Welcome news, but to borrow some words from former Fed Chair Jay Powell, we recognize that the decline in energy prices will take some time to flow through the system. Looking ahead, the combination of improving input prices and recent pricing action by companies has us thinking margins may not be under as much pressure as feared a few months ago. That has us revisiting market EPS expectations for the second half of 2026.

2. The Bureau of Economic Analysis is due to release the May personal consumption expenditures price index data on Thursday morning. Here’s what economists tracked by FactSet are expecting: Headline YoY: +4.1%, higher than April’s rate of +3.8%. Headline MoM: +0.5%, higher than April’s rate of +0.4%. Core YoY: +3.3%, same as in April. Core MoM: +0.4%, higher than April’s rate of +0.2%. (WSJ)

Given the fall in energy prices and comments in S&P Global’s Flash June PMI report, that strong suggest inflation peaked in May, unless the May PCE Price Index report is blazing hot, we’re inclined to look past it. Instead, our focus will be on June, July, and August inflation data. In our view, those figures will be a far greater determinant of potential Fed rate hikes, which the market currently sees happening in September and again in Q1 2027. Our gut says the market’s view is skewing at least somewhat aggressive, but we’ll follow the data and position the Portfolio accordingly.

3. The question for Micron Technology coming into its earnings was not how big the memory-chip boom is, but how long it can last. Longer than anyone originally thought, appears to be the answer… Beyond the figures—quadrupled revenue, a more than tenfold rise in earnings—the key point was Micron’s confidence that the chip shortage would go beyond 2027 amid intense demand for its components in artificial-intelligence hardware. Perhaps the most striking number from the report was 16—that’s the number of long-term supply deals Micron has locked in, guaranteeing approximately $100 billion in revenue. That eases fears that the current sky-high prices and margins are unsustainable. (Barron’s)

When we listened in on Micron’s (MU) earnings call last night, the comment that had our ears burning was the expectation that the industry supply for memory would improve gradually in 2028, but there was no timetable for when memory supply would catch up to demand. The why behind that, per Micron, is that:

“Data center-driven growth will be increasingly complemented by AI-enabled features in smartphones, high-end PCs and new consumer devices, as well as in automotive, industrial applications and robotics.“

That sure sounds like a multi-year tailwind, not only for memory, but the larger digital infrastructure, and especially networking, as the volume of data created and consumed explodes. Needless to say, this is a compelling endorsement for multiple Portfolio positions, including Applied Materials (AMAT) as Micron lifts its capital spending forecast to $27 billion this year, up from “more than $25 billion” earlier this year.

4. The results of the Federal Reserve Board’s annual bank stress test confirmed that large banks are well positioned to weather a severe recession and able to continue to lend to households and businesses. Despite absorbing more than $708 billion in total loan losses under this year’s hypothetical scenario, capital declined only 1.6 percentage points in aggregate, staying above minimum capital requirements. (Federal Reserve)

With that announcement, cue the dividend increase announcements from Goldman Sachs (GS), The Bank of New York Mellon (BNY), JPMorgan Chase (JPM) and others. Turning to the Portfolio’s positions in Morgan Stanley (MS) and Bank of America (BAC), MS announced a 15% increase to its quarterly dividend, which puts the next payment to shareholders at $1.15 per share. MS also reauthorized a share repurchase program up to $20 billion with no expiration date.

In a statement, BofA said it remains “committed to delivering for shareholders” and will make a dividend announcement following its July board meeting. We’ll be watching for that announcement, but with financial companies offering a double-digit dividend hike, anything less would be notable.

5. Jefferies Financial missed second-quarter profit estimates on Wednesday as weakness in asset management overshadowed gains from robust dealmaking and ‌equity underwriting, sending its shares down 1.4% after the bell… Jefferies’ investment banking net revenue jumped 57.5% year-over-year to a record $1.21 billion, driven by a 47% surge in advisory revenue and higher fees from underwriting share sales. The results give investors an early glimpse into second-quarter investment banking trends on Wall Street, with large U.S. banks poised to provide a broader picture in the coming weeks. Dealmaking on Wall Street has remained strong in 2026 despite geopolitical headwinds, as confidence holds steady and boardrooms take a long-term view, striking acquisitions in the chase for scale. (Reuters)

Nice confirmation for the strength we’ve been seeing in the IPO and M&A markets, but the quarterly results from Jefferies (JEF) also showed a strong uptick in trading volumes that drove a double-digit increase in its Capital Markets business. We see that as a silver-lining signal from market volatility over the last few months, and one that bodes well for trading operations at Morgan Stanley and BofA.

6. IBM on Thursday unveiled what it said was the world’s first technology capable of producing chips smaller than one nanometer, as tech companies race to build semiconductors that ‌can handle increasingly demanding AI workloads… The announcement comes at a time when chipmakers are searching for ways to maintain the decades-long trend of cramming more computing ⁠power into smaller spaces, a phenomenon known as Moore’s Law. (Reuters)

Dubbed the “nanostack” this announcement is welcome news, even if IBM (IBM) said production would “begin within five years.” While that sounds like a long time from now, the technology needs to go from the lab to real-world production, with IBM first having to license the chip technology. Past licensees have included Samsung (SSNLF) and Rapidus in Japan. One company that does not license chip technology from IBM? Taiwan Semiconductor (TSM), and that means we will be waiting to see when and how it responds to this IBM news.

7. Economic data today per TipRanks: PCE Price Index (May), Personal Income & Spending (May), Durable Goods Orders (May), Chicago Fed National Activity Index (May), Jobless Claims (Weekly).

8. Companies reporting today per TipRanks: Acuity (AYI), Blackberry (BB), Darden Restaurants (DRI), McCormick & Co. (MKC), Winnebago (WGO).

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At the time of publication, TheStreet Pro Portfolio was long AMAT, BAC, MS and MU.