8 Key Items Shaping the Stock Market Thursday: Oil, Memory, Rate Cuts?

Micron CEO Sanjay Mehrotra

These are the early headlines and other items poised to influence the market at the start of trading Thursday. As we share this collection of market drivers, U.S. equity futures point to a lower open.

1. Oil prices were jumping Thursday after a drone hit a Saudi Arabian refinery and President Donald Trump warned that the U.S. would strike Iran’s South Pars gas field if Iran attacks Qatar. (Barrons) President Donald Trump's administration is considering deploying thousands of U.S. troops to reinforce its operation in the Middle East, as the U.S. military prepares for possible next steps in its campaign against Iran, said a U.S. official and three people familiar with the matter. (Reuters)

2. Complacent investors who assume there will be a swift resolution to the Iran war are making a high-risk bet given how bad surging oil prices typically end up being for stocks, according to strategists at JPMorgan Chase & Co. The team, led by Dubravko Lakos-Bujas, said investors are failing to price the potential economic damage from soaring energy costs, despite the fact that four out of five oil shocks since the 1970s have led to recession. (Bloomberg) New economic reports show inflation is ticking higher, prompting the Federal Reserve on Wednesday to keep interest rates steady. Hiring has stagnated, wage growth has fallen, and market-based interest rates are climbing amid concern over rising prices, sending mortgage rates up. And with oil now topping $100 a barrel — with no end in sight for the Iran conflict — Trump’s economy only has a thin cushion to rely on if the war in the Middle East starts to rock the economy. (Politico)

We talked about the topic of complacency yesterday and why the market, in our view, has yet to connect the dots back to the upcoming Q1 2026 earnings season and guidance. That reinforces our recent decision to add the ProShares Short S&P 500 (SH) to the Pro Portfolio. Unless there is a dramatic development in the U.S.-Iran conflict and the Strait of Hormuz that points to an unwinding of tensions, which doesn’t seem likely near-term, odds are we will remain largely on the sidelines in the very near-term as we hunt for fresh meat for the Bullpen.

We will continue to track the level of fear in the market, which has fallen deeper into "Extreme Fear" per the Fear & Greed Index, and keep a close eye on the Volatility Index (VIX), which is once again moving higher.

3. Morgan Stanley on Thursday joined Goldman Sachs and Barclays in pushing back its forecast for the U.S. Federal Reserve's next interest rate cut to September from ‌June after the central bank flagged inflationary risks amid the Middle East conflict. The Wall Street brokerage now expects quarter-point reductions in September and December, revising its earlier forecast of reductions in June and September. (Reuters)

While Morgan Stanley (MS) and a few others still call for two rate cuts, the vast majority of the market sees just one coming late this year. We agree with Fed Chair Powell’s presser comments yesterday that we will need to see more data on the impact of the Middle East conflict on oil, gas and other prices as well as consumer spending. With Powell signaling the Fed doesn’t expect to see the roll-off from 2025 tariffs until mid-year, it supports a potential H2 2026 rate cut, but when we layer in the step up in Trump’s 2026 tariff efforts, barring a collapse in the jobs market, questions about the potential for a late 2026 rate cut are growing.

4. There is a severe memory shortage from the AI data center investment boom, concentrated at the top end of memory and storage chips. Sales to data center customers were up 181% in the quarter. But that has rippled through the supply chain and there have been steep price increases in all types of memory. Sales to non-data center customers were up 219% from the year before… Though timing these cycles has vexed many investors, there was a fairly familiar pattern of sales growing quickly, then shrinking. But the memory makers may now be entering a new era, one dominated by demand for high-price memory and storage chips that go into AI data centers. Micron and its peers are trying to manufacture these chips as quickly as possible, and that’s rippling through the whole memory supply chain to the detriment of consumer goods manufacturers. (Barrons)

We’ll have more to say on Micron’s (MU) earnings and guidance as well as implications for our holdings in a stand-alone note. The key takeaway from the above and Micron’s corresponding comments is it sees enough sustained demand to raise next year’s capital spending levels by more than $10 billion, which would put it over $35 billion compared to the $25+ billion targeted for this year. Amid the market’s current selloff, this will lead us to revisit some semi-cap companies for the Portfolio.

5. Just a day after HSBC’s chief financial officer said the bank would turn to artificial intelligence to cut costs, the bank reportedly is considering up to 20,000 job cuts. Bloomberg News reported that the bank was considering getting rid of 20,000 roles, or about 10% of its total workforce, by targeting roles in global service centers that aren’t client-facing. (MarketWatch)

Add this to recent comments from Block (XYZ) , Meta (META) , and others that should soon show up in monthly Challenger Job Cuts reports but also restrain oncoming job creation figures. We continue to think headlines like those alongside higher gas and soon other prices will weigh on consumer spending choices.

6. Accenture reported higher second-quarter revenue as companies’ AI adoption continues to drive demand for its services. The company raised the lower end of its fiscal-year guidance. It now sees local-currency revenue growth of 3% to 5% and adjusted earnings of $13.65 to $13.90 a share. It had previously expected fiscal-year revenue growth in local currency of 2% to 5% and adjusted earnings of $13.52 to $13.90 a share. Analysts see fiscal-year adjusted earnings of $13.86 a share. (WSJ)

On Accenture’s (ACN) earnings call this morning, we’ll look for more color on how AI adoption is influencing customer decisions and the degree to which it affected the sequential increase in bookings to $22.1 billion.

7. Economic data today per TipRanks: Jobless Claims (Weekly), Philadelphia Fed Index (March), New Home Sales (January), Wholesale Inventories (January), EIA Natural Gas Inventories (Weekly).

8. Companies reporting today per TipRanks: AM – Accenture (ACN) , Alibaba (BABA) , Darden Restaurants (DRI) , Signet Jewelers (SIG) . PM – FedEx (FDX) , Planet Labs (PL) .

At the time of publication, TheStreet Pro Portfolio was long MS and SH.