Stocks Turn Lower as Middle East Tensions Rise

The S&P 500 Index ($SPX) (SPY) today is down -0.35%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.75%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.23%.  June E-mini S&P futures (ESM26) are down -0.44%, and June E-mini Nasdaq futures (NQM26) are down -0.37%.

Stock indexes gave up an early advance and turned lower as Middle East tensions flared up after the United Arab Emirates (UAE) said an Iranian drone attack caused a fire at the Fujairah oil industry zone.  The UAE also issued a missile threat warning after an oil tanker was struck by Iranian drones outside the Strait of Hormuz.  
Stocks initially moved higher today, with the Nasdaq 100 posting a new all-time high.  Signs of corporate resilience are boosting stocks on optimism that AI investment will continue to fuel earnings growth.  AI-infrastructure stocks and software companies are leading the broader market higher. Stocks added to their gains after US March factory orders rose more than expected, a sign of economic strength.

US Mar factory orders rose +1.5% m/m, stronger than expectations of +0.6% m/m and the biggest increase in four months.

Stocks also have support after President Trump said the US will begin guiding some neutral ships trapped in the Persian Gulf out through the Strait of Hormuz.  US Central Command said it would provide military support, including guided-missile destroyers, aircraft, and drones, to ships transiting the strait. 

However, on Sunday, a tanker was hit by projectiles just north of Fujairah, United Arab Emirates, and Iran's FARS news agency claimed that two missiles had hit a US warship after it had ignored warnings.  Iran's military said that US forces would be attacked if they entered the Strait of Hormuz.

WTI crude oil prices (CLM26) recovered from early losses today and are up more than +3% after Iran launched a drone and missile attack against the UAE.  The Strait of Hormuz remains essentially closed, as about a fifth of the world’s oil and liquefied natural gas transits through the strait.  Goldman Sachs estimates that the current disruption has drawn down nearly 500 million bbl from global crude stockpiles, with the drawdown potentially reaching 1 billion bbl by June.

The markets are discounting a 5% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.

Earnings results thus far this reporting season have been supportive of stocks.  As of today, 82% of the 317 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 is down -1.22%.  China's Shanghai Composite did not trade, with markets in China closed for the Labor Day holiday.  Japan's Nikkei Stock Average did not trade, with markets in Japan closed for the Greenery Day holiday.

Interest Rates

June 10-year T-notes (ZNM6) today are down by -8 ticks.  The 10-year T-note yield is up +4.4 bp to 4.414%.  T-notes are sliding today amid higher crude oil prices, which raise inflation expectations. The 10-year breakeven inflation rate climbed to a 14.5-month high of 2.518% today.  T-notes extended their losses today on the stronger-than-expected US March factory orders report.

European government bond yields are moving higher today.  The 10-year German Bund yield is up +2.0 bp to 3.057%.  The 10-year UK gilt yield is not trading today, with markets in the UK closed for the May Day holiday.

The Eurozone May Sentix investor confidence index unexpectedly rose +2.8 to -16.4, stronger than expectations of a decline to -22.0.

ECB Governing Council member Peter Kazimir said an ECB rate hike in June is "all but inevitable amid a prolonged period of broad-based price increases coupled with visibly weaker growth across the Eurozone."

Swaps are discounting a 93% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Chipmakers and AI-infrastructure stocks are moving higher today to provide support to the broader market.  Micron Technology (MU) is up more than +7% to lead gainers in the S&P 500 and Nasdaq 100, and SanDisk (SNDK) is up more than +5%. Also, Seagate Technology Holdings Plc (STX) is up more than +2%, and Applied Materials (AMAT), Lam Research (LRCX), and Western Digital (WDC) are up more than +1%. 

Software stocks are stronger today, a positive factor for the overall market.  Atlassian (TEAM) and Oracle (ORCL) are up more than +6%, and ServiceNow (NOW) is up more than +4%.  Also, Intuit (INTU) and Datadog are up more than +3%, and Salesforce (CRM) is up more than +2% to lead gainers in the Dow Jones Industrials.  In addition, Palantir Technologies (PLTR) and Workday (WDAY) are up more than +2%, and Adobe Systems (ADBE) and Autodesk (ADSK) are up more than +1%.

Cryptocurrency-exposed stocks are climbing today, with Bitcoin (^BTCUSD) up more than +3% at a 3-month high.  Coinbase Global (COIN) is up more than +7%, and Galaxy Digital Holdings (GLXY) is up more than +4%.  Also, Strategy (MSTR) is up more than +3%, MARA Holdings (MARA) is up more than +1%, and Riot Platforms (RIOT) is up +0.65%.

Norwegian Cruise Line Holdings (NCLH) is down more than -7% to lead cruise line operators lower after cutting its full-year adjusted Ebitda forecast to $2.48 billion to $2.64 billion from a previous estimate of $2.95 billion, weaker than the consensus of $2.79 billion.  Carnival (CCL) and Royal Caribbean Cruises Ltd (RCL) are down more than -2%. 

Freight operators are sliding today after Amazon launched Amazon Supply Chain Services, expanding its freight, distribution, fulfillment, and parcel shipping solutions to businesses beyond its marketplace sellers.  GXO Logistics (GXO) is down more than -12%, and United Parcel Service (UPS) is down more than -8% to lead losers in the S&P 500.  Also, FedEx (FDX) and CH Robinson Worldwide (CHRW) are down more than -8%, and Expeditors International of Washington (EXPD) is down more than -7%.  In addition, Old Dominion Freight Line (ODFL) is down more than -5%, and JB Hunt Transport Services (JBHT) is down more than -3%.

Celcuity (CELC) is up more than +15% after its Phase 3 trial of gedatolisib plus fulvestrant in PIK3CA mutant breast cancer patients met its primary endpoint. 

EBay (EBAY) is up more than +5% after GameStop proposed to buy the company for about $56 billion in cash and stock. 

GlobalFoundries (GFS) is up more than +3% after Cantor Fitzgerald upgraded the stock to overweight from neutral with a price target of $80.

Amazon.com (AMZN) is up more than +2% to lead gainers in the Dow Jones Industrials after Fubon Securities upgraded the stock to buy from neutral with a price target of $320. 

GameStop (GME) is down more than -6% after offering to purchase EBay for $125 per share in a cash and stock deal.   

Earnings Reports(5/4/2026)

Allison Transmission Holdings (ALSN), BioMarin Pharmaceutical Inc (BMRN), BWX Technologies Inc (BWXT), CNA Financial Corp (CNA), Corebridge Financial Inc (CRBG), Diamondback Energy Inc (FANG), Duolingo Inc (DUOL), Equitable Holdings Inc (EQH), IAC Inc (IAC), Inspire Medical Systems Inc (INSP), Lattice Semiconductor Corp (LSCC), Loews Corp (L), MSA Safety Inc (MSA), Norwegian Cruise Line Holdings (NCLH), ON Semiconductor Corp (ON), Palantir Technologies Inc (PLTR), Paramount Skydance Corp (PSKY), Pinnacle West Capital Corp (PNW), Pinterest Inc (PINS), RB Global Inc (RBA), Tyson Foods Inc (TSN), Vertex Pharmaceuticals Inc (VRTX), Viper Energy Inc (VNOM), Vornado Realty Trust (VNO), Williams Cos Inc/The (WMB).