Stocks Pressured by AI Fears and Soaring Crude Oil Prices

The S&P 500 Index ($SPX) (SPY) today is down -0.38%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.25%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.78%.  June E-mini S&P futures (ESM26) are down -0.44%, and June E-mini Nasdaq futures (NQM26) are down -0.83%.

Stock indexes are mostly lower today, led by losses in technology stocks amid concerns that the massive investment in artificial intelligence will not pay off.  The Wall Street Journal reported that OpenAI recently failed to meet its goals for new users and sales, undercutting the shares of OpenAI partners and AI infrastructure stocks, including Nvidia, Oracle, Advanced Micro Devices, and CoreWeave.

On the positive side, Coca-Cola is up more than +5% to lead the Dow Jones Industrials higher after reporting stronger-than-expected Q1 net revenue.

Soaring crude oil prices are also boosting inflation expectations, pushing bond yields higher and weighing on stocks.  WTI crude oil jumped to a 2-week high today after the New York Times reported that President Trump is not satisfied with Iran’s latest proposal to reopen the Strait of Hormuz and end the war, which includes postponing nuclear negotiations.  Mr. Trump has said any deal must include agreements to curb Iran’s nuclear activities. The 10-year T-note yield climbed to a 3-week high of 4.38% today ahead of the start of the 2-day FOMC meeting, where the Fed is expected to keep monetary policy unchanged. 

WTI crude oil prices (CLM26) are up by more than +3% today as 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 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 150 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 lower today.  The Euro Stoxx 50 fell to a 2.5-week low and is down -0.35%.  China's Shanghai Composite closed down -0.19%.  Japan's Nikkei Stock 225 closed down -1.02%.

Interest Rates

June 10-year T-notes (ZNM6) today are down -7 ticks.  The 10-year T-note yield is up +2.2 bp to 4.362%.  June T-notes fell to a 3-week low today, and the 10-year T-note yield rose to a 3-week high of 4.378%.  Today’s +3% jump in WTI crude oil prices is boosting inflation expectations and weighing on T-notes. The 10-year breakeven inflation rate rose to a 14-month high of 2.472% today.  Also, supply pressures are undercutting T-note prices, as the Treasury will auction $30 billion of 2-year floating rate notes and $44 billion of 7-year T-notes later today. 

European government bond yields are moving higher today.  The 10-year German bund yield rose to a 2-week high of 3.086% and is up +4.3 bp to 3.076%.  The 10-year UK gilt yield climbed to a 1-month high of 5.028% and is up +3.8 bp to 5.010%.

The ECB's Mar 1-year CPI expectations rate rose to 4.0% from 2.5% in Feb, stronger than expectations of 2.8% and the highest figure in nearly 2.5 years.  The Mar 3-year CPI expectations rate rose to 3.0% from 2.5% in Feb, stronger than expectations of 2.6% and the highest figure in three years.

Swaps are discounting a 13% chance of a +25 bp ECB rate hike at its next policy meeting on Thursday.

US Stock Movers

AI infrastructure stocks and OpenAI partners are retreating today after the Wall Street Journal reported that OpenAI recently missed its own revenue and new-user targets.  ARM Holdings Plc (ARM) is down more than -6% to lead losers in the Nasdaq 100, and Applied Materials (AMAT) is down more than -5%.  Also, Lam Research and KLA Corp (KLAC) are down more than -4%, and Seagate Technology Holdings Plc (STX), Advanced Micro Devices (AMD), Broadcom (AVGO), Western Digital (WDC), ASML Holding NV (ASML), Marvell Technology (MRVL), Oracle (ORCL), and CoreWeave (CRWV) are down more than -3%.  In addition, Nvidia (NVDA) is down more than -2% to lead losers in the Dow Jones Industrials, and Vertiv Holdings (VRT), Qualcomm (QCOM), Applied Digital (APLD), and GE Vernova (GEV) are down more than -2%. 

Rambus (RMBS) is down more than -17% after reporting Q1 EPS of 55 cents, weaker than the consensus of 65 cents. 

Alexandria Real Estate Equities (ARE) is down more than -13% to lead losers in the S&P 500 after reporting Q1 revenue of $671.0 million, weaker than the consensus of $692.7 million.  

Spotify Technology SA (SPOT) is down more than -10% after reporting Q1 operating income of $737 million, below the consensus of $787 million.

Pentair Plc (PNR) is down more than -9% after forecasting Q2 adjusted EPS of $1.47 to $1.50, below the consensus of $1.50.

Qiagen NV (QGEN) is down more than -7% after forecasting full-year CER net sales of up +1% to +2%, well below the consensus of +4.62%.

Corning (GLW) is down more than -5% after forecasting Q2 core EPS of 73 cents to 77 cents, the midpoint below the consensus of 76 cents.   

United Parcel Service (UPS) is down more than -4% after leaving its full-year financial guidance unchanged despite reporting better-than-expected Q1 sales and profit. 

Centene (CNC) is up more than +6% to lead gainers in the S&P 500 after reporting Q1 revenue of $49.94 billion, above the consensus of $47.41 billion, and raising its full-year revenue forecast to $187.5 billion to $191.5 billion from $186.5 billion to $190.5 billion, the midpoint above the consensus of $188.79 billion. 

Coca-Cola (KO) is up more than +5% to lead gainers in the Dow Jones Industrials after reporting Q1 net revenue of $12.50 billion, better than the consensus of $12.25 billion. 

LendingClub (LC) is up more than +5% after reporting Q1 new originations of $2.67 billion, stronger than the consensus of $2.63 billion.

Dynatrace (DT) is up more than +4% after the Wall Street Journal reported that Starboard Value LP took a stake in the company and is pushing the company to better capitalize on the shift to AI. 

Crane Co. (CR) is up more than +1% after reporting Q1 net sales of $696.4 million, better than the consensus of $667.3 million. 

Nucor (NUE) is up more than +1% after reporting Q1 net sales of $9.50 billion, stronger than the consensus of $8.87 billion. 

Earnings Reports(4/28/2026)

Allegion plc (ALLE), American Tower Corp (AMT), Arch Capital Group Ltd (ACGL), Avery Dennison Corp (AVY), Booking Holdings Inc (BKNG), BXP Inc (BXP), Centene Corp (CNC), CMS Energy Corp (CMS), Coca-Cola Co/The (KO), Corning Inc (GLW), CoStar Group Inc (CSGP), Ecolab Inc (ECL), Edison International (EIX), Equity Residential (EQR), Essex Property Trust Inc (ESS), Expand Energy Corp (EXE), Extra Space Storage Inc (EXR), F5 Inc (FFIV), Fair Isaac Corp (FICO), FirstEnergy Corp (FE), Franklin Resources Inc (BEN), General Motors Co (GM), Hilton Worldwide Holdings Inc (HLT), Incyte Corp (INCY), Ingersoll Rand Inc (IR), Invesco Ltd (IVZ), Kimberly-Clark Corp (KMB), Mondelez International Inc (MDLZ), NXP Semiconductors NV (NXPI), Omnicom Group Inc (OMC), ONEOK Inc (OKE), PACCAR Inc (PCAR), Pentair PLC (PNR), PPG Industries Inc (PPG), Robinhood Markets Inc (HOOD), S&P Global Inc (SPGI), Seagate Technology Holdings PL (STX), Sherwin-Williams Co/The (SHW), Starbucks Corp (SBUX), Sysco Corp (SYY), Teradyne Inc (TER), T-Mobile US Inc (TMUS), United Parcel Service Inc (UPS), Veralto Corp (VLTO), Visa Inc (V), Waste Management Inc (WM), Welltower Inc (WELL), Xylem Inc/NY (XYL), Zimmer Biomet Holdings Inc (ZBH).