S&P 500 Reverses After Hitting Record High as Oil Prices Bounce Back

The S&P 500 Index ($SPX) (SPY) today is down -0.40%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.51%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.28%.  

Equity markets retreated this afternoon, erasing earlier gains as a resurgence in crude oil prices weighed on sentiment. While the international Brent benchmark saw a slight dip yet remained above $100, U.S. West Texas Intermediate futures surged past the $95-per-barrel mark.

US weekly initial unemployment claims rose +10,000 to 200,00, showing a stronger labor market than expectations of 205,000.  Weekly continuing claims unexpectedly fell -10,000 to a 2.25-year low of 1.766 million, showing a stronger labor market than expectations of an increase to 1.800 million.

US Q1 nonfarm productivity rose +0.8%, stronger than expectations of +0.6%.  Q1 unit labor costs rose +2.3%, weaker than expectations of +2.5%

Fed comments today were slightly hawkish and negative for stocks and bonds.  Boston Fed President Susan Collins said interest rates should stay at current "mildly restrictive" levels, but “if the inflation trajectory looked like it was significantly moving in the wrong direction," policymakers would "need to reassess what the appropriate policy would be."  Also, Cleveland Fed President Beth Hammack said the FOMC's signal that the next rate move will be a cut is misleading, and her baseline is that interest rates will be on hold for a long period.

The markets are awaiting further updates after the US presented a proposal to Iran that would gradually reopen the Strait of Hormuz and lift the US blockade on Iranian ports.  Negotiations over Iran's nuclear program would come later in the process. Iran is expected to respond via Pakistan in the next few days.

The markets are discounting a 6% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.

Earnings results thus far in this reporting season have been supportive of stocks.  As of today, 84% of the 411 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 fell from a 2.5-week high and is down -0.57%.  China's Shanghai Composite rallied to a 2-month high and closed up +0.08%.  Japan's Nikkei Stock Average soared to a record high, finishing sharply higher by +5.58%.

Interest Rates

June 10-year T-notes (ZNM6) today are up by +4 ticks.  The 10-year T-note yield is down -1.1 bp to 4.338%.  Jun T-notes climbed to a 1-week high today, and the 10-year T-note yield fell to a 1.5-week low of 4.319%.  T-notes have support today from weaker crude prices, which ease inflation expectations.  The 10-year breakeven inflation rate fell to a 2-week low of 2.415% today.  Also, today’s reports showing Q1 nonfarm productivity was better than expected, and Q1 labor costs were weaker than expected, were supportive of T-notes.

Gains in T-notes are limited due to today’s weekly jobless claims report, which showed strength in the US labor market, a hawkish factor for Fed policy.  Also, hawkish Fed comments today weighed on T-note prices after Boston Fed President Susan Collins and Cleveland Fed President Beth Hammack said they favored keeping interest rates on hold.

European government bond yields are moving lower today.  The 10-year German Bund yield fell to a 2-week low of 2.957% and is down -1.5 bp to 2.985%.  The 10-year UK gilt yield fell to a 2-week low of 4.886% and is down -2.8 bp to 4.912%.

Eurozone Mar retail sales fell -0.1% m/m, a smaller decline than expectations of -0.3% m/m.

German Mar factory orders rose +5.0% m/m, stronger than expectations of +1.0% m/m.

Swaps are discounting a 79% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Datadog (DDOG) is up more than +30% to lead software stocks higher and gainers in the S&P 500 and Nasdaq 100 after reporting Q1 revenue of $1.01 billion, better than the consensus of $957.8 million, and raising its full-year revenue estimate to $4.30 billion to $4.34 billion from a previous estimate of $4.06 billion to $4.10 billion, well above the consensus of $4.09 billion.  Also, ServiceNow (NOW) and Workday (WDAY) are up more than +6%, and Atlassian (TEAM) and Intuit (INTU) are up more than +5%. In addition, Autodesk (ADSK) is up by more than +4%, and Salesforce (CRM) is up more than +3% to lead gainers in the Dow Jones industrials.  Finally, Microsoft (MSFT), Oracle (ORCL), and Adobe (ADBE) are up more than +2%. 

Fortinet (FTNT) is up more than +23% to lead cybersecurity stocks higher after reporting Q1 billings of $2.09 billion, well above the consensus of $1.82 billion, and raising its full-year billings forecast to $8.80 billion to $9.10 billion from a previous forecast of $8.40 billion to $8.60 billion, stronger than the consensus of $8.49 billion.  Also, Zscaler (ZS) is up more than +9%, and Palo Alto Networks (PANW) and CrowdStrike Holdings (CRWD) are up more than +7%. In addition, and Okta (OKTA) is up more than +5%, and Cloudflare (NET) is up more than +3%.

Energy producers and service providers are moving lower today with WTI crude oil prices down more than -4%. APA Corp (APA) is down more than -6%, and Baker Hughes (BKR) is down more than -5%.  Also, Devon Energy (DVN), Marathon Petroleum (MPC), and Diamondback Energy (FANG) are down more than -4%.  In addition, SLB Ltd (SLB), Phillips 66 (PSX), ConocoPhillips (COP), Occidental Petroleum (OXY), Halliburton (HAL), and Valero Energy (VLO) are down more than -3%.  Finally, Chevron (CVX) is down more than -2% to lead losers in the Dow Jones industrials, and Exxon Mobil (XOM) is also down more than -2%. 

Axon Enterprises (AXON) is up more than +13% after reporting Q1 net sales of $807 million, above the consensus of $779.2 million. 

Albemarle (ALB) is up more than +9% after reporting Q1 net sales of $1.43 billion, above the consensus of $1.34 billion. 

Ormat Technologies (ORA) is up more than +9% after reporting Q1 adjusted EPS of $1.30, stronger than the consensus of 92 cents.

Howmet Aerospace (HWM) is up more than +8% after reporting Q1 adjusted EPS of $1.22, above the consensus of $1.11, and raising its full-year adjusted EPS forecast to $4.88-$5.00 from a previous forecast of $4.35-$4.55, stronger than the consensus of $4.63. 

AppLovin (APP) is up more than +6% after reporting Q1 revenue of $1.84 billion, better than the consensus of $1.77 billion, and forecasting Q2 revenue of $1.92 billion to $1.95 billion, stronger than the consensus of $1.89 billion.

MKS Inc. (MKSI) is up more than +3% after reporting Q1 net revenue of $1.08 billion, better than the consensus of $1.04 billion. 

Zoetis (ZTS) is down more than -21% to lead losers in the S&P 500 after reporting Q1 revenue of $2.26 billion, weaker than the consensus of $2.30 billion.

Insmed (INSM) is down more than -17% to lead losers in the Nasdaq 100 after forecasting full-year product revenue of $1.0 billion, below the consensus of $1.3 billion.

Whirlpool (WHR) is down more than -13% after reporting Q1 net sales of $3.27 billion, weaker than the consensus of $3.42 billion, and cutting its full-year revenue forecast to $15.0 billion from a previous forecast of $15.3-$15.6 billion, below the consensus of $15.21 billion. 

ARM Holdings Plc (ARM) is down more than -7% after reporting Q4 royalty revenue of $671 million, below the consensus of $693.3 million.

Coherent Corp (COHR) is down more than -5% after reporting a Q3 adjusted EPS of $1.41, right on expectations. 

US Foods Holding (USFD) is down more than -4% after reporting Q1 net sales of $9.61 billion, below the consensus of $9.66 billion.

Earnings Reports(5/7/2026)

Airbnb Inc (ABNB), Akamai Technologies Inc (AKAM), Becton Dickinson & Co (BDX), Block Inc (XYZ), Charles River Laboratories Int (CRL), Coinbase Global Inc (COIN), Consolidated Edison Inc (ED), Corpay Inc (CPAY), Datadog Inc (DDOG), EPAM Systems Inc (EPAM), Evergy Inc (EVRG), Expedia Group Inc (EXPE), Gen Digital Inc (GEN), Gilead Sciences Inc (GILD), Howmet Aerospace Inc (HWM), Kenvue Inc (KVUE), McDonald's Corp (MCD), McKesson Corp (MCK), Mettler-Toledo International Inc (MTD), Microchip Technology Inc (MCHP), Monster Beverage Corp (MNST), Motorola Solutions Inc (MSI), News Corp (NWSA), Republic Services Inc (RSG), Sempra (SRE), Tapestry Inc (TPR), Targa Resources Corp (TRGP), Trade Desk Inc/The (TTD), Viatris Inc (VTRS), Vistra Corp (VST), WW Grainger Inc (GWW), Wynn Resorts Ltd (WYNN), Zoetis Inc (ZTS).