Market Snapshot

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📉 Banana Bits

• Wall Street ended Friday higher as Microsoft and chipmakers lifted the major indexes

• U.S. consumer sentiment hit a four-month low as inflation expectations rose to 4.6%

• Goldman sees AI infrastructure spending hitting $7.6 trillion through 2031 as hyperscaler capex keeps climbing

• Economists lift Canada inflation forecasts as oil keeps price pressures elevated

• Oil jumped back above $106 after Trump rejected Iran’s latest Hormuz proposal

• Gold dropped more than 3% as higher oil strengthened Fed rate-hike bets

Market News

Friday Relief, Monday Reversal

Stocks rebounded Friday as hopes for progress in U.S.-Iran talks pushed oil prices lower and gave battered bond markets some relief. That move reversed by Monday morning, with Brent back near $107 as hopes for a near-term reopening of the Strait of Hormuz faded. Brent had settled Friday at $104.32, down 2.1%. The S&P 500 gained 0.5%, the Nasdaq rose 0.5%, and the Dow climbed 0.9%, while Microsoft and other AI-linked stocks helped lead the rebound.

Oil remains the key market wildcard, with elevated energy prices keeping inflation and interest-rate concerns alive. The relief in bonds was limited, with the 10-year Treasury yield briefly reaching 5.23% Friday, its highest level since 2007, while the 30-year reached about 5.53%, its highest level since 2004. By Monday morning, the 10-year was back above 5.2% as rising oil prices kept expectations for further Fed tightening in focus.

Meanwhile, U.S. consumer sentiment fell to a four-month low of 48.1 as one-year inflation expectations rose to 4.6%. Business investment remained resilient, with core capital-goods orders rising 1.6% in August, well above the 0.5% expected, adding to the mixed economic picture and keeping pressure on the rates outlook.

Peel Take: Friday gave Wall Street some relief as oil pulled back and stocks bounced, but Monday’s reversal shows how quickly that setup can change. With Brent still above $100 and long-term Treasury yields near multi-decade highs, markets remain highly sensitive to oil, inflation, and the path of Fed policy.

What's Ripe

Humana Inc (HUM) 4.63% 

• Humana rose 4.6% to $397.93 after Barclays upgraded the health insurer to Overweight from Equal Weight and raised its price target to $515 from $407.

• The bank cited growing confidence that several of Humana’s Medicare Advantage contracts could improve their Star Ratings, which could boost bonus payments and improve profitability.

• Peel Take: Better Star Ratings can mean higher government bonus payments and stronger economics for Humana’s Medicare business. Barclays is betting that an improvement could give earnings and the stock another boost.

Microsoft Corp. (MSFT) 3.66% 

• Microsoft rose 3.7% to $516.17 after unveiling new capabilities for Copilot, including new coding tools, integrated Office apps, and an always-on AI agent.

• The updates reinforce Microsoft’s push to make Copilot a more central part of everyday workplace software and deepen AI adoption across its enterprise customer base.

• Peel Take: Microsoft is trying to turn Copilot from an AI add-on into an everyday workplace tool. If those new features drive broader adoption, AI could become an increasingly important growth engine across Microsoft’s massive enterprise customer base.

What's Rotten

Zscaler Inc.(ZS) 10.06%

• Zscaler dropped 10.1% after announcing that Chief Revenue Officer Mike Rich will step down for personal reasons on Oct. 1, with Ross Tackett, its head of worldwide sales, taking over the role.

• Rich will remain a strategic adviser through year-end, but the unexpected change at the top of the sales organization put pressure on shares despite Tackett already being an internal executive.

• Peel Take: A 10% drop suggests investors are reading more into the reshuffle than a simple leadership change. For a high-growth cybersecurity company, any shake-up at the top of the sales organization can raise questions about future growth and execution.

Twilio Inc. (TWLO) 7.96%

• Twilio dropped 8.0% to $275.80 after HSBC downgraded the communications software company to Reduce from Hold, with a $211 price target.

• The bank warned that excitement surrounding Meta’s Muse AI agent may not translate into enough incremental revenue for Twilio to justify the stock’s recent rally.

• Peel Take: Investors may have been hoping AI agents would create a new wave of demand for Twilio’s communication tools, but HSBC isn’t convinced. If AI-driven traffic doesn’t translate into meaningful revenue growth, Twilio’s valuation becomes harder to justify.

🧠 Technical Trip

Interview Q&A from HSBC

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🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• Nubank enters early-stage talks on a potential Monzo deal worth up to £10 billion

• Northern Star rejects a $27 billion takeover approach from Gold Fields

• Oura’s IPO draws four times the orders as it seeks to raise up to $2.2 billion

• ADARx raises $446 million in an upsized U.S. IPO

Student Success Corner

Banana Brain Teaser

Previous

A company has $80M of EBITDA, $20M of D&A, $10M of interest expense, and a 25% tax rate. What is net income?

Answer: $37.5 million

Today

A company has $25M of accounts payable at the beginning of the year and $33M at the end. What is the impact on cash flow from operations?

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

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