Market Snapshot

Get a Top Job Offer, Guaranteed (or tuition is free) | Apply Here

📉 Banana Bits

• U.S. forces struck two Iranian rocket launchers in the Strait of Hormuz on Sunday, the first military action in the Gulf in about a month.

• September rate-hike odds jumped to about 62% on the CME FedWatch tool, up from around 40% a week ago.

• Monday was Tim Cook’s last day as Apple CEO after 15 years. Hardware chief John Ternus takes over Tuesday.

• Amazon dropped about 3% after reports the FTC, joined by more than 20 states, is preparing a lawsuit over alleged “soft reserve” bids.

Market News

Hormuz Heat, Hawkish Heat

Wall Street closed August on the back foot. The S&P 500 fell 0.3% to 7,686.14, the Dow dropped 374 points, or 0.7%, to 53,185.90, and the Nasdaq slipped 0.1% to 26,370.89. Small caps also weakened, with the Russell 2000 losing 0.5%. Still, August remained profitable: the Dow gained 1.3%, the S&P 500 rose 2.6% and the Nasdaq climbed 3.9%. It was the Dow’s fifth consecutive monthly gain and the S&P’s best August since 2021.

The central catalyst Monday was energy. Renewed U.S.-Iran military action around the Strait of Hormuz pushed Brent crude up 2.7% to settle at $90.49 per barrel, while U.S. crude traded above $85. The strait ordinarily handles about one-fifth of global oil shipments, making every new escalation a direct threat to supply. Higher crude also reaches far beyond energy stocks: it raises transportation expenses, pressures corporate margins and makes inflation more difficult to contain.

The bond market reinforced that message. The 10-year Treasury yield rose to 4.76%, while the policy-sensitive two-year yield reached 4.35%. Rate futures moved to roughly a 66% probability of a September increase after Warsh warned that the Fed must see clear progress toward its 2% inflation target. Rising yields increase borrowing costs throughout the economy while making bonds a more competitive alternative to equities, especially highly valued growth stocks whose profits are expected far into the future.

Sector performance followed the macro script. Energy companies advanced as crude prices rose, while utilities were the market’s standout losers. Edison International collapsed 23.1% and PG&E fell 20% after California’s wildfire package excluded most of Governor Gavin Newsom’s requested liability protections. The agreement preserved the ability of survivors and insurers to pursue utilities, leaving investors without the predictable financial backstop they had hoped lawmakers would provide.

Company-specific news still overpowered the weak tape in several places. Amazon declined 2.5% after the FTC and 22 states filed their advertising lawsuit. Tesla surged 5.4%, leading the major indexes ahead of Thursday’s Cybercab launch event in Austin. GameStop gained 2.9% despite forecasting lower quarterly sales because investors welcomed reduced dilution from its revised debt exchange. In other words, the market was risk-off – but not headline-proof.

Peel Take: A 0.3% S&P dip is not a crash. It is the market pricing two things it hates at once: hotter oil and a Fed chair who just told you cuts are not the base case. If Hormuz stays a headline and not a blockade, crude should give some of this back and Monday becomes a buy-the-dip into payrolls. If tankers actually stop moving, you do not want to be the person who faded energy “because it’s September.” We are not dumping the AI book because Warsh used the word inflation. Nvidia just wrote a $3.5 billion post-it that says the buildout is still on. We are also not adding a bunch of duration until Friday’s jobs number tells us whether the hike is a live round or a scare quote. August paid you. September is going to make you earn it.

What's Ripe

TESLA (TSLA) 5.51% 

• Tesla was Monday’s top performer in the S&P 500, closing near its session high despite weakness across the broader market.

• Investors are positioning for Thursday’s Cybercab launch in Austin. The two-seat vehicle is designed without a steering wheel or pedals and is intended for Tesla’s autonomous ride-hailing network.

• The rally capped an approximately 18% August gain, although Tesla remained roughly 18% lower for 2026 heading into the event.

• Peel Take: This was anticipation, not validation. Tesla’s valuation increasingly depends on investors treating autonomy as a major future business, even though its financial contribution remains limited today. Thursday therefore needs to provide more than dramatic doors, moody lighting and another vehicle driving slowly across a stage. Investors need a credible path from demonstration to scaled, permitted commercial service. Deployment timing, safety performance, utilization and per-mile economics are the actual scoreboard.

SLB N.V. (SLB) 4.83% 

• SLB rallied alongside the energy sector as Brent crude settled above $90, but company-specific M&A provided an additional catalyst.

• The oilfield-services company agreed to acquire cooling-equipment manufacturer Kelvion for $4.1 billion, consisting of $3.4 billion in cash and $700 million of assumed debt.

• SLB expects its combined data-center solutions business to produce $4.5 billion to $5 billion of revenue and $700 million to $800 million of adjusted EBITDA in 2028.

• Peel Take: This is one of the cleaner AI-adjacent acquisitions we have seen. SLB is not merely adding “artificial intelligence” to a PowerPoint and hoping the multiple handles the rest. It is buying cooling infrastructure that data centers physically require to operate. The strategy also gives SLB another growth route beyond the traditional drilling cycle. Integration risk and the $4.1 billion price tag deserve scrutiny, but the industrial logic passes the sniff test: more computing requires more electricity, and more electricity becomes more heat.

What's Rotten

Edison International (EIX) 23.07%

• Edison International suffered the steepest major-company decline Monday, losing more than $16 per share on unusually heavy volume.

• California’s latest wildfire agreement omitted most of Newsom’s proposals to reduce utility payments following utility-caused fires. Survivors may still pursue litigation, and insurers retain avenues to recover payouts from utilities.

• The decision landed with investors already focused on Edison subsidiary Southern California Edison’s wildfire exposure. State officials have tied SCE equipment to the January 2025 Eaton Fire in Altadena.

• Peel Take: Utility investors generally sign up for regulated returns, slow growth and dividends, not open-ended catastrophe litigation. When the legal framework becomes unpredictable, the stock stops trading like a conventional utility and starts trading like an insurance company that cannot confidently estimate its worst-case claim. Until California establishes a durable liability and funding structure, this is less “buying a dependable utility at a discount” and more “underwriting a legal regime that is still being assembled.” 

PG&E Corp (PCG) 20.06%

• PG&E erased one-fifth of its market value Monday, marking its worst session since March 2020 and wiping out its gains for the year.

• Investors had expected California lawmakers to provide greater protection from wildfire-related insurer claims and more certainty around long-term funding. The final package supplied neither to the market’s satisfaction.

• PG&E previously entered Chapter 11 bankruptcy protection in 2019 under the weight of wildfire liabilities, before emerging in 2020. That history explains why investors reacted first and asked questions later.

• Peel Take: Wall Street has muscle memory, and PG&E’s is particularly painful. The company has improved operations and rebuilt its financial position since bankruptcy, but Monday demonstrated how quickly political or wildfire developments can overwhelm years of incremental progress.Sometimes the market touches the stove twice. PG&E shareholders have touched the entire kitchen.

🧠 Technical Trip

Interview Q&A from Barclays

👉 Want 1-on-1 recruiting help from Barclays bankers & 5,000+ top mentors? Apply to WSO Academy

🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• Aon is buying USI Insurance Services for $17 billion in a debt-funded acquisition that will expand its U.S. middle-market insurance business and is expected to close in Q4 2026.

• SLB agreed to acquire Kelvion for $4.1 billion pushing the oilfield-services giant deeper into data-center cooling and thermal management.

• ONEOK is buying Brazos Midstream’s Permian assets for $4.425 billion with a separate $9 billion nonvoting investment led by Apollo helping fund the purchase and repay roughly $5 billion of existing debt.

• Eli Lilly is acquiring Merida Biosciences for as much as $2.88 billion adding experimental autoimmune treatments to Lilly’s pipeline and extending its push beyond diabetes and obesity.

• Nvidia is investing $3.5 billion in MediaTek as part of MediaTek’s $3.9 billion overseas convertible-bond offering, deepening cooperation around NVLink, PCs, vehicles and custom AI chips.

Student Success Corner

Banana Brain Teaser

Previous

A company has $40 million in accounts receivable and $200 million in annual revenue. Assuming a 365-day year, what is the company’s approximate Days Sales Outstanding (DSO)?

Answer: 73 days

Today

A company reports $80 million of EBITDA, has $20 million of depreciation, $15 million of interest expense, and pays a 25% tax rate. What is the company’s net income?

How Would You Rate Today's Peel?

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

ADVERTISE // WSO ALPHA // ACADEMY // COURSES // LEGAL