Finance Evening: Brent Crude Briefly Tops $110 as Tech Rout Drags Nasdaq Down 2.14%

📊 North American Markets Today

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Brent Crude Briefly Tops $110 After Hormuz Escalation

Source: CNBC

Oil prices climbed sharply on Friday after Iran stepped up attacks in the Strait of Hormuz, Houthi militants fired missiles at Saudi Arabia, and Ukraine vowed to keep hitting Russian refineries. Brent futures touched a session high of $110 a barrel — the first time since May — before easing to close at $109.86, up 3.7%. U.S. West Texas Intermediate rose 3.5% to settle at $101.41, gaining more than 10% for the week, while Brent added nearly 5%.

Saudi Arabia intercepted several missiles over the Red Sea on Friday, including one headed toward the Yanbu oil export terminal, and destroyed three drones over Riyadh and southern regions, a military spokesman said. At least nine tankers and cargo ships have been attacked in the Strait of Hormuz since Sunday; U.S. Central Command said Iran sank the container ship GFS Pride on Wednesday, and the crew of the Singapore-registered vessel was safely evacuated.

Meanwhile, the “energy ceasefire” the White House tried to broker between Ukraine and Russia has unraveled. President Volodymyr Zelenskyy said Kyiv would resume strikes on Russian refineries. U.S. diesel averaged $6.33 a gallon on Friday, more than 70% above the same period last year, according to AAA.

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Netflix Shares Fall as Leadership Shake-Up Targets Viewer Growth

Source: Yahoo Finance

Netflix (NFLX) shares fell in early trading Friday after the streaming giant announced a leadership shake-up amid slowing viewer engagement. Former Disney executive Peter Rice was named as the company's next chief content officer, replacing Bela Bajaria, who is departing after nearly a decade. The change comes before next week's quarterly results.

Earlier this week, Netflix said it would cut 6% of its workforce — about 1,000 employees — its largest reduction since 2022. Piper Sandler analyst Tom Champion pointed to a generational shift, with audiences moving from traditional television to mobile devices, and said short-form, mobile-first content is driving much of the growth. Netflix is scheduled to report quarterly results next Tuesday, Oct. 20, after the market close.

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Taiwan Plans $4 Billion Texas Parks for Nvidia’s Suppliers

Source: Yahoo Finance

Taiwan’s economics minister, Kung Ming-hsin, said the government supports a plan to build U.S. industrial parks, starting in Texas, with the first complex costing up to $4 billion, according to remarks reported Oct. 16. The parks would target smaller suppliers to TSMC and AI server assemblers such as Foxconn, placing them near Nvidia and other data-center hardware makers. Supply is Nvidia’s tightest constraint: CEO Jensen Huang said on the company’s Aug. 26 earnings call that “our entire supply chain is challenged.”

TSMC carries deeper reshoring exposure, with $265 billion already committed to U.S. investment and Texas fab capacity under active evaluation. Both names fell on Oct. 15 during a wider tech selloff over AI funding worries; Nvidia closed at $217.23, down 1.84%.

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TSMC Beats and Raises on Third-Quarter Results

Source: Investor's Business Daily

TSMC beat third-quarter estimates and guided above views for the current period, though its stock fell after the report. The world’s largest contract chipmaker earned $4.60 per U.S. share on sales of $46.72 billion in the September quarter, ahead of the $4.46 per share that analysts polled by FactSet had expected.

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A Hot PPI Keeps the Pressure on the Fed

Source: CNBC

September’s producer price index came in at 1.3%, the biggest monthly gain since March 2022 and more than double the 0.6% consensus, pushing the year-over-year increase to 6.3%, the largest since December 2022. Gasoline prices rose 20%, but core prices still climbed 0.5%, suggesting the pressure is broader than energy alone.

Seven Wall Street estimates compiled by CNBC show core PCE for September is forecast to rise 0.32%, up from 0.25% in August, lifting the annual core rate to 3.1%. “We see real risks the Fed will deliver another rate hike in two weeks’ time,” wrote Kathy Bostjancic, chief economist at Nationwide. Fed futures showed a 29% probability of a hike at this month’s meeting but a 91% chance of at least one increase by December. Fed Chairman Kevin Warsh has said one test for holding off is confidence that inflation will return to the 2% target in a timely way.

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U.S. Bonds Face Their Second-Longest Drawdown in History

Source: 24/7 Wall St.

Treasury yields are punishing bond investors in ways not seen since the country’s founding debt crisis, with effects reaching mortgage rates, retirement portfolios and government borrowing costs. BofA Global Research ranks the current slump as the second-longest bond drawdown in U.S. history — a record stretching back to the federal debt Alexander Hamilton organized as the first Treasury secretary.

The 10-year Treasury yield stood at 5.19% on Oct. 14, up 1.16 percentage points from a year earlier. Consumer prices rose 3.7% year over year in September, and the Fed lifted its target range’s upper bound to 4.00% on Sept. 17. Over the past year the 10-year yield rose from a low of 3.97% on Feb. 27 to a high of 5.31% on Oct. 5, and on Oct. 15 every maturity from 7 to 30 years yielded above 5%.

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High Mortgage Rates Deepen a ‘K-Shaped’ Housing Market

Source: CNN

The average 30-year fixed mortgage rate reached 7.4% this week, up from 6.27% a year earlier, according to Freddie Mac data released Thursday. With U.S. midterm elections weeks away, the rise adds pressure to a strained housing market in which wealthier buyers are accounting for a growing share of transactions while lower-income buyers struggle.

“It’s very expensive to get into a house if you’re looking for one right now,” said Oscar Munoz, head of U.S. economics at TD Securities. “The only people that we find are driving transactions in the housing market are high-income consumers.” Mortgage applications were 16% lower last week than a year earlier, and cash sales made up 27% of September transactions, down from 30% a year ago.

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Character.ai Bankruptcy Puts the ‘Reverse Acquihire’ Model in Focus

Source: NPR

Character.ai — the AI companion app that went viral on TikTok and peaked at 28 million monthly active users — is filing for Chapter 11 bankruptcy this week, NPR’s Planet Money reported. In 2024 Google “picked up” the company for $2.7 billion, but rather than buying it, Google hired away its founders and bought a nonexclusive license to the technology — a “reverse acquihire” that has occurred at least six times among AI startups in the past two years.

After the deal, Character.ai shifted away from costly LLM training toward building AI characters, and its founders were gone. Despite holding $2.7 billion, management still sought to raise money and struggled to monetize users, and the company faced litigation over alleged harm to minors and copyright concerns from Disney. Disney is now looking to pick over parts of the company for $20 million.

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Penske Automotive Agrees to a $16.3 Billion Buyout

Source: MotorBiscuit

Penske Automotive Group, the publicly traded dealership business chaired by NASCAR team owner Roger Penske, said Thursday, Oct. 15, that it agreed to a $16.3 billion deal to go private. Penske Corporation and Japanese trading company Mitsui & Co., which already own a majority, plan to buy the remaining shares and end the company’s run on the New York Stock Exchange.

Outside shareholders will receive $212 per share in cash, up from the $210 initially proposed in July — an 8.84% premium over Wednesday’s close. The $16.3 billion figure is total enterprise value including debt. Once closed, Penske Corporation is expected to own about 64% and Mitsui 36%. The deal, approved by the board on a special committee’s unanimous recommendation, is expected to close in the first quarter of 2027. It covers the automotive retail business, not Team Penske or other racing operations.

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Hyundai Recalls More Than 94,000 Vehicles Over Fire Risk

Source: Fox Business

Hyundai is recalling 94,622 vehicles over a fire risk tied to overheating motors on powered front seats, according to a National Highway Traffic Safety Administration report. The seat slider and height adjustment control switch on non-memory power seats may become dislodged or damaged under external force, potentially leaving the switch engaged and the seat motor running after the occupant exits, NHTSA said.

The recall covers 39,978 model year 2017-2020 Genesis G80 and 54,644 model year 2015-2016 Hyundai Genesis sedans; Hyundai estimates about 1% have the defect, and a remedy is still in development. NHTSA advises owners to park outside and away from other vehicles until repairs are done. Hyundai said it is aware of two fire incidents linked to the defect and no crashes.

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