Market Snapshot

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📉 Banana Bits

• Anthropic’s leaked IPO filing reveals soaring losses despite rapidly growing revenue

• Treasury yields stay near multi-decade highs even as oil falls and Fed hike bets cool

• U.S. consumer confidence falls to a 12-year low as labor-market worries deepen

• U.S. offers 40 million SPR barrels as Washington tries to ease pressure from elevated oil prices

Market News

Stocks Slip as High Rates and Weak Consumer Confidence Keep Investors Cautious

Wall Street finished slightly lower Tuesday after another shaky day for stocks. The S&P 500 fell 0.17% to 7,670.84, the Dow lost 132 points to 51,349.92, and the Nasdaq slipped 0.09% to 26,797.54. The biggest pressure continued to come from the bond market, where the 10-year Treasury yield briefly reached 5.29%, its highest level since 2007, while the 30-year touched 5.62%, its highest since 2002.

Economic data gave investors another reason to stay cautious. Consumer confidence fell to 81.9, its lowest level since 2014, while job openings dropped by 256,000 to 7.079 million in August, below expectations. Stocks recovered some of their losses later in the session after New York Fed President John Williams said there was “no need for urgency” to raise rates again, pushing investors to scale back expectations for an October hike.

Individual stocks had a much more dramatic day. Carnival jumped 13.4% after reporting record quarterly revenue, stronger-than-expected earnings, and record booking levels for 2027. Bloom Energy gained 10.8% as investors cheered signs of strong demand following its manufacturing expansion and reassurance around its major Oracle project. On the other side, Fair Isaac plunged 26.5% as changes in the mortgage market opened the door for VantageScore to compete more directly with FICO, while Apple fell 2.7% as investors weighed growing AI competition from Meta alongside pressure from elevated Treasury yields.

Oil provided some relief on the inflation front. Brent crude fell 2.5% to $102.59 and WTI dropped to $89.38 as signs of recovering Middle East exports eased some supply concerns. The decline helped take a little pressure off inflation expectations, but it was not enough to pull long-term Treasury yields meaningfully lower.

Peel Take: Tuesday was another reminder that the bond market is running the show right now. A 5%+ 10-year Treasury yield raises the hurdle for equity valuations, especially when consumers are feeling worse about the economy and the labor market is showing signs of cooling. But Carnival jumping 13% also shows investors are still willing to reward companies that deliver strong results. For now, this does not look like panic. It looks like Wall Street getting much pickier about what it is willing to buy. Until long-term yields start coming back down, even good news may have to work harder to keep stocks moving higher.

What's Ripe

Carnival Corp. (CCL) 13.41% 

• Carnival surged 13.41% after reporting record quarterly revenue and better-than-expected profit despite higher fuel costs.

• The company said 2027 booked occupancy and pricing are at record levels, with half of the year already on the books.

• Peel Take: Higher fuel costs weren't enough to keep people off cruise ships. Carnival delivered strong results and, more importantly, showed that travelers are already lining up for 2027. Wall Street loves a comeback story, and Carnival gave it one Tuesday.

Bloom Energy Corp. (BE) 10.80% 

• Bloom jumped 10.80% after RBC pointed to the company's major Fremont manufacturing expansion as evidence that customer demand remains strong.

• The company also said Oracle reaffirmed its commitment to 2.4 GW of Bloom fuel cells for Project Jupiter, which remains on Oracle's planned timeline despite a natural-gas pipeline delay tied to permitting.

• Peel Take: AI needs a ridiculous amount of electricity, and Bloom wants to be one of the companies supplying it. Expanding production while Oracle sticks with its huge project is exactly what investors wanted to hear. The AI boom isn't just selling chips anymore. It's selling power.

What's Rotten

Fair Isaac Corp. (FICO) 26.52%

• FICO plunged 26.52% after the FHFA said Fannie Mae and Freddie Mac would move to a single mortgage pricing grid that includes both FICO and VantageScore, removing an important disadvantage for FICO's lower-cost competitor.

• Rocket Mortgage added to the pressure by saying VantageScore 4.0 will become its preferred credit-scoring model for eligible loans, raising concerns that FICO could lose share in a market it has long dominated.

• Peel Take: FICO's biggest advantage in mortgages has always been how deeply embedded it is in the lending system. The second that starts becoming optional, the business looks a lot less untouchable. Tuesday's 27% collapse was Wall Street quickly pricing in something FICO hasn't had to deal with much before: real competition.

Apple (AAPL) 2.66%

• Apple fell 2.66% after Bank of America highlighted Meta's new Muse AI agent as a potential long-term threat to Apple's services business.

• The concern is that AI agents could increasingly handle product discovery, referrals, and transactions themselves, potentially bypassing parts of Apple's ecosystem. Elevated Treasury yields added another headwind for large-cap growth stocks.

• Peel Take: Apple didn't have some catastrophic announcement Tuesday. It ran into growing AI competition and a bond market that keeps getting harder to ignore. When investors can earn more than 5% on Treasuries, even a company as dominant as Apple has to work harder to justify its price.

🧠 Technical Trip

Interview Q&A from JPMorgan

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🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• Piper Sandler is in talks to acquire Perella Weinberg Partners

• RHI Magnesita makes a revised offer for Vesuvius worth about 549p per share

• Pearson agrees to acquire AI skills platform Workera

• Caterpillar agrees to acquire longtime Cat dealer John Fabick Tractor

Student Success Corner

Banana Brain Teaser

Previous

A portfolio has a 60% chance of gaining 15% and a 40% chance of losing 10%. In the following year, if it gained in Year 1, it has a 70% chance of gaining 15% again; if it lost in Year 1, it has only a 30% chance of gaining 15%. What is the probability the portfolio gains in both years?

Answer: 42%

Today

A company has a 60% chance of beating earnings. If it beats earnings, its stock has an 80% chance of rising. If it misses earnings, its stock has only a 25% chance of rising. What is the overall probability the stock rises?

How Would You Rate Today's Peel?

Happy Investing,
Elie, Mitchell, Fernanda, Nick, & Patrick

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