Key Highlights

● Macquarie started FTAI Aviation at Outperform, one of six aerospace and defense names.

● No price target or closing share move for FTAI was reported.

● FTAI leases and services jet engines, so airline fuel pressure feeds into its end customers.

● GE Aerospace and RTX report Oct 20, a read on the engine aftermarket.

Macquarie weighs in

FTAI Aviation (NASDAQ:FTAI) was among the stocks in focus across the FT Wilshire 5000 on Friday after Macquarie initiated coverage with an Outperform rating, according to analyst-call roundups published that day. No price target or closing share move for FTAI was reported in Friday's market coverage.

FTAI was part of a six-stock aerospace and defense initiation by Macquarie, all at Outperform. The other companies were AeroVironment (NASDAQ:AVAV), CACI International (NYSE:CACI), Intuitive Machines (NASDAQ:LUNR), Karman Holdings (NYSE:KRMN) and Kratos Defense & Security Solutions (NASDAQ:KTOS). An Outperform rating generally means an analyst expects a stock to beat its peers or the broader market over the analyst's time frame.

FTAI Aviation owns and leases commercial jet engines and aircraft and runs an aerospace products business focused on maintenance, repair and parts for widely used engines that power narrow-body jets. Its business benefits when airlines keep older aircraft flying longer, which increases demand for engine overhauls and replacement parts.

Aviation in a fuel shock

FTAI's inclusion in the initiation came during a challenging week for airlines, its end customers. Brent crude climbed $3.94 to settle at $109.86 a barrel on Friday, its highest close since May 19, per market data, as Iran escalated attacks on tankers in the Strait of Hormuz. American Airlines (NASDAQ:AAL) faces about $1 billion of added fourth-quarter fuel costs, market reports said, and United Airlines (NASDAQ:UAL) and Southwest Airlines (NYSE:LUV) are trimming capacity.

Higher fuel costs can affect aviation suppliers in different ways. Airlines facing pressure on margins may cut back flying, which reduces engine wear, but they may also defer purchases of new, more expensive aircraft and lean more heavily on existing fleets, which supports aftermarket services. How that balance plays out is one of the questions hanging over the sector.

Defense names, meanwhile, attracted buying. Northrop Grumman (NYSE:NOC) jumped to $519.75, and L3Harris (NYSE:LHX) also rose. Karman was among midday winners.

The broader market

The FT Wilshire 5000, which aims to capture nearly the entire investable US stock market, moved within a down session. The S&P 500 fell 84.62 points to 7,659.44, the Dow Jones Industrial Average slipped 175.28 points to 52,002.41, and the Nasdaq Composite dropped 572.99 points to 26,140.03. The Russell 2000 lost 45.90 points to about 2,721.

Investors sold chip, software and AI-infrastructure stocks over concerns about how the artificial-intelligence build-out will be financed, and rotated into energy, utilities, staples, health care and financials. The Cboe Volatility Index rose 3.53 points to 19.99 after touching 22.31 intraday, its highest since June 11. Federal Reserve Chair Kevin Warsh, speaking in Bangkok, said, "I don't prejudge meetings."

FTAI Engine Aftermarket Read From GE and RTX

Aviation and aerospace earnings arrive next week. Oil prices and the Strait of Hormuz remain key variables, and the Federal Reserve's next rate decision is Oct 28.

United Airlines reports Oct 20 after the close, Southwest Airlines on Oct 21 and American Airlines on Oct 22, when investors will look for details on capacity and fleet plans. GE Aerospace (NYSE:GE), a major engine maker, and RTX (NYSE:RTX) report Oct 20 before the open, offering a read on the engine aftermarket that is central to FTAI's business.