The Closer
Published
Markets closed the session absorbing two parallel shocks, a widening Strait of Hormuz conflict and a deepening credit scare around AI infrastructure financing, and neither resolved after the bell. U.S. Central Command confirmed that an Iranian Revolutionary Guard Corps projectile sank the Singapore-flagged GFS Pride, with all 21 crew rescued, while a second vessel, the GFS Giselle, suffered hull damage in a separate attack. More than 40 vessels still transited the waterway in the prior 24 hours, and President Trump said he would not use a nuclear weapon on Iran but suggested more non-refinery targets remain available once allied munitions stocks are replenished.
The AI financing worry that pressured chipmakers all week carried into the evening. CoreWeave fell 2.6% in after-hours trading even after Nvidia's Jensen Huang defended its financial health, with the company's five-year credit default swaps surging to a record 1,194.5 basis points and its 2031 bonds dropping to 82.75 cents on the dollar. Credit markets are now pricing more than 60% five-year default risk against over $40 billion in debt and projected losses above $2.5 billion, and the Philadelphia Semiconductor Index fell roughly 9% on the week.
Earnings added to the after-hours tape. J.B. Hunt dropped 2.1% after missing EPS estimates by a dime despite revenue coming in above expectations, with the company also disclosing $174 million in third-quarter buybacks. Charles Schwab reported in-line EPS on light revenue, and Alcoa beat EPS estimates while reaffirming 2026 production guidance and flagging higher interest expense tied to a recent notes issuance. Elsewhere, Varonis Systems agreed to be acquired by Thoma Bravo-backed Proofpoint for roughly $6.3 billion, or $49.75 a share in cash, and Semtech raised its fiscal third-quarter outlook on strength in data center demand.
Macro crosscurrents persisted. Attention turns to Fed Chair Kevin Warsh's upcoming remarks for signals on an October hike, with Evercore's Krishna Guha expecting Warsh to avoid endorsing one given the global backdrop. U.S.-Mexico tariff talks stalled after Commerce Secretary Lutnick resisted cutting auto and metals tariffs, and Ukrainian officials warned of a near-total depletion of Patriot interceptors. Asian equities rose 0.6% overnight as chip shares stabilized, though Nasdaq 100 futures slipped 0.5% on renewed AI-financing concerns.