• Bonds: Treasury auctions this week arrive at an especially sensitive time for bonds; today’s 3-year auction saw average demand, but tomorrow’s 10-year auction could shake markets.
• Stocks: All indexes gained, with the S&P 500 and Nasdaq both closing at new record highs as Treasury yields shifted lower.
• Commodities: Oil prices settled as the market adjusted to new releases of oil from the Middle East and G7 nations.

M&A

Morning Brew Inc.

After a yearlong courtship complete with lawsuits, rival suitors, and financing drama, Paramount and Warner Bros. Discovery finally tied the knot today, closing their roughly $110 billion merger and creating a new media mega-giant named Skydance. Shares will trade on the NYSE under the ticker SKYD.

The combination puts a head-spinning who’s who of Hollywood under one roof, bringing together streaming services and TV networks like HBO, CBS, CNN, Paramount+, and HBO Max, along with franchises ranging from Harry Potter to Mission: Impossible.

The wedding bill

But married life is no picnic: Skydance now has to prove that the empire it just built is financially sustainable, starting with a balance sheet carrying roughly $80 billion of debt.

Paramount raised about $52 billion of debt to fund the acquisition, including investment-grade bonds, junk bonds, and loans, and it did so at an especially painful time for borrowers. The longest-dated bonds were issued at yields approaching 9%, while the broader surge in Treasury yields has pushed borrowing costs to levels not seen in decades.

To ease some of that pressure, Skydance is targeting $6 billion in annual cost savings, bringing in former Mattel CEO Ynon Kreiz as co-CEO to focus on combining overlapping operations and streaming businesses, and aiming to bring leverage below four times annual EBITDA by 2028.

Skip the honeymoon fund

That calls into question the investment case for the newly combined company, and Wall Street is far from convinced.

Wolfe Research maintained an Underperform rating, calling the path ahead an “uphill climb” as leverage approaches 7x EBITDA. Citizens, meanwhile, reiterated an Outperform rating and argued that combining Paramount and Warner Bros. creates a deep enough library of content and intellectual property to become a more formidable streaming destination. For now, though, skepticism still dominates: Only three of the 25 analysts tracked by Bloomberg rate the stock Buy or equivalent, while 10 recommend selling it.

Investors looking for less complicated media bets may instead turn to more established rivals. Disney shares are down 8.57% this year, but Wolfe Research sees “very good risk/reward” in the stock, while Netflix, down 26.74% this year, picked up another vote of confidence from TD Cowen yesterday. The firm reiterated its Buy rating, arguing that Netflix remains positioned to deliver double-digit revenue growth alongside expanding margins and free cash flow over the next several years.

For Skydance, it’s certainly been quite the rocky start. But if the pair can make it through thick and thin, there may still be a happily ever after.—SY

      

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Stocks

🟢 What’s up

• AMD popped 2.81% on a Citi price-target hike that identified the chipmaker as a major beneficiary of CPU demand fueled by Meta’s Muse.
• Architectural services company Apogee Enterprises jumped 12.17% after raising its full-year outlook on stronger-than-expected earnings.
• Vistra climbed 10.76% on reports that the Trump administration is expected to offer the power producer roughly $4 billion in government loans to upgrade three nuclear plants.
• Marvell Technology rallied 5.81% after unveiling a revenue target that represents roughly 55% to 60% of annual growth over the next half-decade.
• Xanadu Quantum Technologies surged 11.95% thanks to a multiyear partnership with GlobalFoundries to mass-produce components for quantum computers.
• Option Care Health soared 32.65% on a $5.8 billion takeover deal with McKesson and private-equity firm Clayton Dubilier & Rice.
• Corteva gained 12.26% following a JPMorgan Chase upgrade to Overweight that argued last week’s post-spinoff selloff went too far.

🔴 What’s down

• Seagate fell 9.18% on reports that it is competing with Japanese rival Toshiba to acquire the same company.
• ArriVent BioPharma plunged 46.98% after reporting disappointing trial results for its experimental lung cancer treatment.
• Spyre Therapeutics sunk 13.60% thanks to a $350 million stock offering priced below Monday’s close.

Deal of the day

Alphabet says E is for energy

Illustration: Morning Brew Inc., Photo: Adobe Stock

Today in news Oppenheimer won’t have to grapple with guilt over: Google has signed a $4.3 billion deal with Constellation Energy, which operates the US’s largest nuclear power fleet, to bring 890 megawatts of nuclear energy online.

The 20-year power purchasing agreement will upgrade six current nuclear plants in Illinois, New Jersey, and Pennsylvania, and an additional 15-year energy supply deal between the companies will unlock another 2.7 gigawatts of power. As for the deal’s raison d’être, it’s the same as most of Big Tech’s spending lately: AI.

Going nuclear

The tech industry at large has been leaning into nuclear energy to power the AI buildout, and Constellation has been reaping the rewards. Amazon inked an agreement with Constellation in January, then came back for more just this week, while Microsoft signed a 20-year plan with the company back in 2024, and Walmart struck a 15-year deal with it in June.

For Constellation, all of those deals pump a lot of cash into its revenue pipeline, along with the added glow of endorsements from some of the biggest companies (and deepest pockets) on the market. As for Google, it allows the tech giant to purchase necessary power at today’s rates, rather than tomorrow’s—a smart move as rising data center demand inevitably raises prices.

While it still holds some stigma, nuclear power is the world’s biggest source of clean energy, and considerably gentler on the environment than carbon-based power sources like coal and oil. Nuke stocks have gotten a boost from the rebrand: While Constellation shot up 12.22% today, a broader set of companies like uranium producer Cameco, source-diversifying utility NextEra Energy, power plant developer Okra, and more all rose on a wide nuclear sector rally.

Despite the surge, Constellation is down nearly 15% this year—but this week’s deals signal some great long-term investing prospects. Consider it an enrichment program investors can get behind.—GR

Finance

Morning Brew Inc., Photo: Adobe Stock

In a year when almost everything on Wall Street seems to be making money, the best trade may have been Wall Street itself.

The original forecast called for a much less profitable year: New York City expected securities industry profits to fall 30% to $45.3 billion as earnings returned to more typical levels.

Instead, Wall Street firms raked in $45.9 billion in profits during the first half of 2026 alone, up 51% from a year earlier and already more than New York City expected them to make in all of 2026, according to a new report from State Comptroller Thomas DiNapoli. Keep that pace up, and annual profits could blow past $90 billion.

Pick a fee, any fee

The first-half boom stretched well beyond traders riding volatile markets higher. Trading revenue rose just 1.8% to $40.3 billion, while underwriting revenue jumped 68% as companies rushed back to capital markets. Global equity issuance surged 76.5%, helped by SpaceX’s record IPO, while dealmaking also rebounded.

That means Wall Street was collecting fees almost everywhere money moved, from companies going public to corporations borrowing cash to dealmakers buying each other.

AI helped keep Wall Street’s money-making machine busy. The NY Comptroller estimates US AI capex will top $581 billion this year, and some of that spending is increasingly flowing through capital markets as hyperscalers raise money for chips, data centers, and other infrastructure.

That makes Wall Street something of a picks-and-shovels play on the AI boom. Banks don’t necessarily have to correctly predict which chipmaker or model wins—they can get paid helping everyone finance and trade the race.

And this broad first-half boom gives investors a useful map for next week’s bank earnings. After a cooling summer, we’re about to find out which parts of Wall Street’s money machine are still humming.

Now comes the test

Banks are already warning that Q3 won’t match Q2’s blowout trading results.

JPMorgan expects Q3 markets revenue and investment-banking fees to rise by mid-to-high teens percentages from a year earlier, compared with second-quarter growth of 35% and 30%, respectively. Bank of America is more cautious, forecasting roughly flat trading revenue and at least a 10% drop in investment-banking fees.

That makes bank earnings more than a check on bank stocks. Wall Street gets paid when companies and investors are willing to take risks. With trading normalizing, underwriting and advisory fees will show whether companies are still raising money and making deals, while bank executives’ pipelines will offer a read on whether that activity can carry into 2027.—HC

      

Sponsored By J.P.Morgan

Joanna Strober, founder and CEO of Midi Health, trusts J.P. Morgan to help guide her company’s growth. By providing access to investors, sector-specific expertise, and personalized guidance, the team at J.P. Morgan helps founders focus on their mission and scale with confidence.

News

• Billionaire Ray Dalio warned that China and Japan could pull back from US Treasuries, adding another headache to America’s growing debt tab.
• What went wrong with Oura? The company shelved its IPO after investors balked at a $15 billion price tag for a one-hit wonder.
• Tesla and SpaceX are rallying together, with hopes of an eventual merger adding fuel to the Musk trade.
• The US trade deficit widened to $105.6 billion in August as imports grew faster than exports.
• McDonald’s faces a lawsuit alleging AI-powered price-fixing, a claim the company denies.
• Even Warren Buffett falls down YouTube rabbit holes. Here’s what the Oracle of Omaha spends his evenings watching.

Calendar

We’ll find out if the ’90s revival has boosted denim’s bottom line as Levi Strauss reports earnings. Plus, we’ll check in on how data center construction is doing when Applied Digital Corporation reports quarterly numbers.

recs

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🎃 Sure, October might be a rough month for stocks. But not for the reason you think.

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