Stocks Slip as Higher Oil Prices Spur Inflation Concerns

The S&P 500 Index ($SPX) (SPY) today is down -0.12%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.30%.  June E-mini S&P futures (ESM26) are down -0.14%, and June E-mini Nasdaq futures (NQM26) are down -0.33%.

Stock indexes are seeing some downward pressure today from today’s +2% rally in WTI crude oil prices.  Crude oil prices jumped after President Trump on Saturday canceled planned negotiations with Iran in Pakistan, saying Iran "offered a lot, but not enough" to continue negotiations.  Iranian President Pezeshkian said Iran won't enter "imposed negotiations under threats or blockade."

However, chip stocks and AI-infrastructure stocks are seeing support after TF International Securities said that Qualcomm is working with OpenAI and Taiwan’s MediaTek to develop smartphone processors.  Also, Micron Technology and SanDisk both received buy ratings from Melius Research. 

Stock indexes are seeing some support from the Axios report that Iran has given the US a new proposal to reopen the Strait of Hormuz and end the war, which includes postponing nuclear negotiations.  The plan calls for extending the ceasefire so the parties can work toward a permanent end to the war, and nuclear talks would come later, only after a US blockade of the strait is lifted. President Trump plans to meet today with national security and foreign policy officials to discuss the proposal.

The US and Iran are locked in a battle for control of the Strait of Hormuz, with both sides blocking the waterway to gain leverage during an extended ceasefire.  The US increased pressure on Iran with its naval blockade as it seeks to get Iran to agree to talks, while Israel and Lebanon are set to extend a ceasefire for three weeks. 

WTI crude oil prices (CLM26) are up by more than +2% today after President Trump canceled a planned weekend trip by US envoys to Pakistan and Iran said it won’t negotiate while the US naval blockade of Iran remains in force.  The Strait of Hormuz remains essentially closed, threatening to deepen the global energy crisis.  The ongoing blockade could exacerbate global oil and fuel shortages, as about a fifth of the world’s oil and liquefied natural gas transits through the strait. Goldman Sachs estimates that crude output in the Persian Gulf has been curtailed by about 14.5 million bpd, or more than 50%, so far in April, and that the current disruption has drawn down nearly 500 million bbl from global crude stockpiles, which could hit a billion bbl by June.

Kevin Warsh now appears to be on a glide path toward Senate approval as the new Fed Chair after Senator Thom Tillis said on Sunday that he dropped his opposition to the nomination.  Mr. Tillis dropped his opposition after the US Justice Department dropped its criminal investigation into the Fed’s overspending on the renovation of its building, in line with Mr. Tillis’ demand.  Mr. Tillis views the investigation into Fed Chair Powell as an attempt to force the Fed to cut interest rates.  The Senate Banking Committee is due to vote on Mr. Warsh’s appointment this Wednesday and then send the nomination to the full Senate for a vote.

The markets are discounting a 0% chance for a +25 bp FOMC rate hike at the Tue-Wed policy meeting.  The markets are expecting the FOMC to leave policy unchanged this week as it awaits further developments in oil prices and inflation.

Earnings season ramps up this week with several Magnificent Seven technology stocks reporting.  Earnings results thus far have been supportive of stocks.  As of today, 80% of the 139 S&P 500 companies that reported Q1 earnings have beaten estimates.  Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence.  Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is down -0.18%.  China's Shanghai Composite closed up +0.16%.  Japan's Nikkei Stock 225 rallied to a new record high and closed up +1.38%.

Interest Rates

June 10-year T-notes (ZNM6) today are down -4 ticks.  The 10-year T-note yield is up +2.9 bp to 4.330%.  June T-notes are moving lower today due to the +2% increase in the price of WTI crude oil, which boosts inflation expectations.  The 10-year breakeven inflation rate rose to a 14-month high of 2.457% today.  Supply pressures are also weighing on T-note prices, as the Treasury will auction $213 billion of T-notes and floating-rate notes this week, beginning with today’s auction of $69 billion of 2-year T-notes and $70 billion of 5-year T-notes.

European government bond yields are moving higher today.  The 10-year German bund yield is up +2.7 bp to 3.020%.  The 10-year UK gilt yield is up +4.1 bp to 4.953%.

The German May GfK consumer confidence index fell -5.2 to a 3.25-year low of -33.3, weaker than expectations of -30.0.

Swaps are discounting a 5% chance of a +25 bp ECB rate hike at its next policy meeting on Thursday.

US Stock Movers

Airline stocks and cruise line operators are falling today as WTI crude oil is up more than +2%, which raises fuel costs and weighs on corporate profits.  Southwest Airlines (LUV), Royal Caribbean Cruises Ltd (RCL), and Carnival (CCL) are down more than -2%, and American Airlines Group (AAL), United Airlines Holdings (UAL), Norwegian Cruise Line Holdings Ltd (NCLH), and Alaska Air Group (ALK) are down more than -1%.  Also, Delta Air Lines (DAL) is down -0.26%.

Chipmakers are sliding today, weighing on the broader market.  Applied Materials (AMAT) and Lam Research (LRCX) are down more than -4%, and Advanced Micro Devices (AMD), Microchip Technology (MCHP), and NXP Semiconductors NV (NXPI) are down more than -3%.  Also, KLA Corp (KLAC), Analog Devices (ADI), and Texas Instruments (TXN) are down more than -2%.

Domino’s Pizza (DPZ) is down more than -9% to lead losers in the S&P 500 after reporting Q1 revenue of $1.15 billion, below the consensus of $1.16 billion.

GE Vernova (GEV) is down more than -3% after BNP Paribas downgraded the stock to neutral from buy.   

Adobe (ADBE) is down more than -1% after Mizuho Securities downgraded the stock to neutral from outperform. 

Sandisk (SNDK) is up more than +5% to lead gainers in the S&P 500 and Nasdaq 100 and Micron Technology (MU) is up more than +4% after Melius Research LLC initiated coverage on the stocks with buy recommendations. 

Verizon Communications (VZ) is up more than +3% to lead gainers in the Dow Jones Industrials after boosting its full-year adjusted EPS forecast to $4.95-$4.99 from a previous forecast of $4.90-$4.95, stronger than the consensus of $4.90.

Fortinet (FTNT) is up more than +2% after Arete double-upgraded the stock to buy from sell with a price target of $104.

Crowdstrike Holdings (CRWD) is up more than +1% after Mizuho Securities upgraded the stock to outperform from neutral with a price target of $520.

VeraDermics (MANE) is up more than +36% after reporting that its oral extended-release minoxidil formulation VDPHL01 met all primary and key secondary endpoints with high statistical significance in a Phase 2/3 clinical trial for male pattern baldness.

Oruka Therapeutics (ORKA) is up more than +19% after giving positive results from a mid-stage trial of its therapy to treat plaque psoriasis. 

Organon & Co. (OGN) is up more than +16% after Sun Pharmaceutical Industries Ltd has lined up a short-term loan to finance its $12 billion acquisition of the company. 

Earnings Reports(4/27/2026)

Alexandria Real Estate Equities (ARE), Amkor Technology Inc (AMKR), AvalonBay Communities Inc (AVB), Brixmor Property Group Inc (BRX), Brown & Brown Inc (BRO), Cadence Design Systems Inc (CDNS), Cincinnati Financial Corp (CINF), Crane Co (CR), Crown Holdings Inc (CCK), Domino's Pizza Inc (DPZ), Kilroy Realty Corp (KRC), NOV Inc (NOV), Nucor Corp (NUE), Public Storage (PSA), Simpson Manufacturing Co Inc (SSD), Sun Communities Inc (SUI), Universal Health Services Inc (UHS), Ventas Inc (VTR), Verizon Communications Inc (VZ).