Yiwen Lu10/1/24

US stocks take a hit on escalating Middle East combat

The S&P 500 closed Tuesday down 0.9%, falling from its record close on Monday.

Escalating conflict in the Middle East sent traders to the sidelines. The tech-heavy Nasdaq 100 was down 1.4%, while Russell 2000, which tracks small caps, retreated 1.5%.

Prices of oil jumped more than 5% on Tuesday early afternoon on the news that Iran launched a barrage of ballistic missiles at Israel, briefly topping $71 per barrel. The West Texas Intermediate crude for November delivery settled up 2.4%, while the global benchmark, December Brent crude, jumped 2.6%. However, crude oil futures were still nearly 20% below their 2024 peaks.

Among other commodities, gold and gas prices also rose.

The energy sector ETF gained 2.3%, the most among all 11 major sectors. Oil and gas company APA Corporation was the second-best S&P 500 performer on Tuesday, up 4.9%. Defense stocks advanced, as the iShares US Aerospace & Defense ETF climbed to a record high. Utilities also rose.

The tech sector was Tuesday’s biggest laggard, as the sector ETF suffered a 2.4% loss. It was dragged down by Apple, which fell 2.9%, and Nvidia, which lost 3.7%.

The dollar gained, while Treasury yields retreated.

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Max Knoblauch & Claire Yubin Oh15m

Nintendo’s Switch 2 sales are outpacing the original Switch by ~2x

After a booming first month in which it sold 5.82 million Switch 2s, Nintendo on Tuesday reported that it has now sold 10.36 million units of the handhelds through September.

That’s well ahead of the original Switch’s pace at the same period in its lifetime — the first Switch model sold 4.7 million units through its first four months, though it went on to become the company’s all-time console sales leader.

Nintendo appears to be growing more confident in the Switch 2, despite US tariffs. Last month, the company boosted its annual production target to 25 million units by the end of March 2026, according to reporting by Bloomberg.

The new data came as the Japanese gaming giant reported its first-half earnings on Tuesday. Nintendo posted ~$3.6 billion in sales for the three months ending September, topping the $3.04 billion expected by analysts polled by Bloomberg.

The company also hiked its full-year guidance to a revenue of ~$14.6 billion, as well as its expectations for Switch 2 sales. The company now anticipates selling 19 million units compared with 15 million units projected previously. Despite the news, Nintendo’s US-traded ADRs were relatively flat in after hours trading on Monday, suggesting elevated expectations into the print.

J. Edward Moreno

Hims rises on revenue beat, discloses it’s again in partnership talks with Novo

Hims also disclosed on Monday that it’s in talks with Novo Nordisk to make the drugmaker’s weight-loss drugs available on its platform. Last time, that didn’t go so well.

Palantir reports Q3 numbers

Palantir posts ninth straight earnings beat, boosts guidance

Here’s how the numbers look.

Matt Phillips14h

Tasha Matsumoto

Amazon and the AI trade sustain stock gains

Stocks kicked off what is historically their best month of the year on a positive note, with help from Amazon and AI.

PAMPLONA, NAVARRA, SPAIN - 2025/07/09: Morante de la Puebla, a bullfighter from Seville fights a bull from the Alvaro Nunez ranch in Pamplona's Plaza Monumental during the 2025 San FermÌn festival

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Trump’s “impossible trinity” on AI and energy

Everyone loves a good trilemma.

In economics, the most famous of the genre was developed by Fleming and Mundell, which posits that you can only successfully achieve two of the following three objectives: the free flow of capital, a fixed exchange rate, and independent sovereign monetary policy.

George Pollack, senior US policy analyst at Signum Global Advisors, proposed a trilemma of his own to describe the Trump administration’s competing policy aims as a red-hot AI boom devours power and leaves households miffed by rising electricity bills.

He wrote:

“This note flags what we believe to be a simple reality whose salience will continue growing in US politics in coming months: the Trump administration, in its remaining three years will face a trilemma as the nation waits for its energy bet to play out — proving able to achieve two, but not all three, of the following objectives:

-Fulfill AI’s energy-appetite.
-Keep repressing renewable sources of energy.
-Appease American electricity consumers.”

Trump AI trilemma

As for evidence that the Trump administration is taking a fossil fuels-first approach while stunting renewables, Pollack pointed to the One Big Beautiful Bill Act, which shrinks access to tax credits for green energy, as well as the end to the federal pause on liquefied natural gas export permits. However, it would be “inaccurate and unfair” to blame President Trump’s policies for surging electricity prices in recent months, he added.

While the government has pursued the expansion of nuclear power as a way to solve this trilemma, the long lead times involved are incongruent with a short-term fix.

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