Oil Up on Renewed U.S.-Iran Concerns: 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 the trading day. As we share this collection of market drivers, U.S. equity futures point to weak market open later on Thursday morning.

1. Trump and his national security team have discussed possibly resuming large-scale military operations in Iran in the coming weeks, including the option of launching strikes before the midterm elections, according to a U.S. official and another person with knowledge of the decisions. The discussions covered the U.S. strategy on Iran and the Houthi rebels in Yemen. The military afterward prepared new options for operations in Iran for Trump to consider. No decisions have been made, the sources said. (NBC News)

The directive didn’t include a specific date for launching strikes, and President Trump hasn’t made any final decisions. But U.S. and Israeli sources say it could happen before the U.S. midterm elections and possibly the Israeli elections a week earlier. The big picture: If major combat operations resume, they’re expected to include massive bombing of Iranian energy, infrastructure and nuclear targets, sources say. (Axios).

Attacks on tankers sailing through the Strait of Hormuz hit their highest last week of any week since the Iran war began, according to maritime security sources tracking incidents, amid ‌a bigger export push by Gulf producers. (Reuters)

The above is leading oil prices to surge higher on Thursday morning, and as we’ve come to expect that is weighing on the equity futures on the morning. At the same time, Treasury yields are also rising following comments this morning from Fed Governor Christopher Waller that more hikes are needed to bring inflation down. Waller also shared that rates did not need to rise immediately, which echoes the findings in the latest Fed meeting minutes published yesterday afternoon. However, Waller’s comment that “hikes” are needed, isn’t likely to go unnoticed by the market and other Fed watchers. Currently the CME FedWatch Tool reflects the market seeing three 25-basis point rate hikes between December and April.

2. PepsiCo Inc. lowered its profit outlook, with the snacks and beverage company’s recovery in North America taking longer than expected. The maker of Doritos, Lay’s and Gatorade now expects core constant currency earnings per share to grow between 1% and 2% this fiscal year, after previously forecasting growth at the low end of 4% to 6%. The company faces higher costs in North America in particular that are weighing on margins… Organic revenue declined slightly in North America for both food and beverages in the third quarter. (Bloomberg)

When I participated on Yahoo! Finance’s “Market Hang” program on Wednesday, I shared why we at the Portfolio viewed PepsiCo’s (PEP) quarterly results and guidance out on Thursday as a litmus test for the “other 50%” of the S&P 500 that wasn’t tech or tech-adjacent. On Thursday morning’s earnings call, we’ll want to hear from PepsiCo management the impact and, to the extent it’s willing to share, the breakdown of higher energy, transport, commodity and other input costs.

As we parse those and other comments, we’ll be thinking about H2 2026 earnings prospects for that “other half” of the S&P 500 against the consensus forecast for 29.5% year-over-year EPS growth in Q3 2026 and 27.6% in Q4 2026 per data published by FactSet.

3. U.S. wholesale retailer Costco reported September net sales of $30.02 billion on Wednesday, up 13% from $26.58 billion last year. The figure is one of its best sales growth rates this year, higher than August’s 10%, July’s 10.7%, and June’s 10.6%. (TipRanks)

Those are the headline figures for Costco’s (COST) monthly revenue reports, and that step up supports our view that consumers feeling the pain of inflation pressures and higher prices would embrace Costco to maximize their shopping dollars. Reaffirming that view, Costco’s adjusted comp sales figure for the total company came in at 7.6% for September and 8.0% for the U.S., up from 5.4% and 5.6%, respectively, in August. We’ll also point out that Costco’s September 2026 figures stand on top of the 5.7% headline total company September 2025 comp sales figure and the 6.0% adjusted total company one. Hard to argue, in our view, that Costco isn’t taking consumer wallet share.

And while it may not be exactly an apples-to-apples comparison, if we compare Costco’s comp sales figures to the decline in Q3 2026 organic revenue for PepsiCo mentioned above, we see that as telling.

4. Taiwan Semiconductor Manufacturing Co. reported a 51% rise in quarterly revenue, a positive signal for investors trying to gauge the sustainability of a global AI infrastructure buildout. Revenue totaled NT$1.49 trillion ($46.7 billion) over the three-months ended in September, based on Bloomberg News’s own calculations. Analysts on average were looking for NT$1.46 trillion. (Bloomberg)

Sticking with September revenue reports, the above from Taiwan Semiconductor (TSM) shows not only continued strength for AI and data center related chip demand, but also the seasonal ramp in newer smartphone models. We’ll get more specifics when TSM reports its full quarterly results on October 15, but when we look at the company’s August and September year-over-year revenue together, it’s up 54% and that is on top of the 32% year-over-year gain for August and September 2025. Chip demand is vibrant, and taken together with other demand facing comments, odds are chip capacity will remain tight for some time. Good for pricing, but also good for our position in Applied Materials (AMAT).

5. Applied Digital delivered surging revenue in its latest quarter as its artificial-intelligence data center buildout began translating into business, offering investors a potential bright spot. The company posted fiscal first-quarter revenue of $341.9 million on Wednesday, a 322% surge over the prior year, and an adjusted loss of 1 cent a share. Consensus analyst estimates called for revenue of $116.3 million and an adjusted loss of 29 cents a share, according to FactSet. (Barron’s)

During Applied Digital’s (APLD) earnings call on Wednesday night, there were two comments that stood out to us. First, Applied Digital expects to place over 600 megawatts into service versus the 250 megawatts over the past 12 months with between 3.5 to 4 gigawatts in place by 2030. That compares to estimates the company had 1.4 gigawatts of capacity in play exiting September.

Second, management clearly called out that power remains the single largest gating factor in the company’s industry. That not only keeps us bullish on our position in Eaton (ETN), but it has us examining other plays as that pain point gets addressed.

6. Samsung Electronics on Thursday projected its quarterly profit would top 100 trillion won, a world first for a technology company, estimating a nearly nine-fold jump in third-quarter earnings as booming demand for AI chips drove strong memory sales… Prices have soared due to the tight supply of conventional DRAM and NAND chips as well as growing demand for high-bandwidth memory (HBM), essential ⁠for processing vast amounts of data for AI applications… Market research firm TrendForce expects conventional DRAM contract prices to rise 10% to 15% in the fourth quarter from the preceding quarter… (Reuters)

All in all, rather positive comments, especially following the quarterly results and guidance earlier this week from Penguin Solutions (PENG). Samsung (SSNLF) will release detailed results, including a breakdown of earnings by business division, on October 29. In that report, we’ll be looking to see when Samsung now sees memory capacity meeting demand, and what that implies for incremental chip capacity demands.

7. Economic data today per TipRanks: Initial & Continuing Jobless Claims (Weekly), Wholesale Inventories (August).

8. Companies reporting today per TipRanks: AM – Helen of Troy (HELE), PepsiCo (PEP)

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At the time of publication, TheStreet Pro Portfolio was long AMAT, COST and ETN.