Oil soars on Middle-East tensions

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Wall Street little changed
The S&P 500 and the Nasdaq Composite largely held on to gains in choppy trade ahead of key inflation data. The S&P 500 closed virtually unchanged, up 0.23 points, while the Nasdaq Composite added 0.21%, boosted by a surge in Nvidia shares. However, the Dow Jones Industrial Average fell 0.36%. The yield on the 10-year Treasury edged lower. 

Mid-East tensions
U.S. crude oil prices rose over 4% on Monday, surpassing $80 per barrel, as the Pentagon deployed additional forces to the Middle East in response to heightened tensions. Defense Secretary Lloyd Austin ordered a carrier strike group, including F-35 warplanes, and a guided-missile submarine to the region. Israel has been preparing for retaliatory strikes by Iran and Hezbollah after the assassination of a Hamas leader in Tehran. 

Inflation outlook
U.S. consumers believe price increases will gradually decline, with expectations for three-year inflation hitting a record low of 2.3%, according to a New York Federal Reserve report. While inflation is expected to remain elevated over the next year, consumers anticipate a decline in the following years. The report comes amid expectations that the Federal Reserve may reduce interest rates next month. The Labor Department’s consumer price index report, due Wednesday, is expected to show a 0.2% increase last month and an yearly rate of 3%, still above the Fed’s 2% target.

Elliott-Starbucks settlement?
Activist investor Elliott Management and Starbucks are in settlement talks, with potential terms including a board seat for Elliott’s Jesse Cohn and governance improvements, according to CNBC’s David Faber. CNBC previously reported the talks held last week would allow CEO Laxman Narasimhan to keep his job and position on the board. Starbucks Chairman Emeritus Howard Schultz has been opposed to the settlement. Elliott has built a $2 billion stake in Starbucks.

Adani shares drop
Shares in the Adani Group of companies dropped on Monday following a Hindenburg report alleging conflicts of interest involving the chair of India’s market regulator. Although shares recovered sharply, the companies lost $2.4 billion in market value. Hindenburg accused Madhabi Puri Buch, chairperson of India’s market regulator SEBI, of having invested in offshore funds linked to the Adani Group. Buch has denied the allegations.

[PRO] Two-month struggle
Investors may face a tough two months as Wall Street’s fear gauge recently spiked to its highest level since the pandemic. Bank of America notes the S&P 500 typically falls after such volatility spikes.