Stocks Settle Higher on Strong Earnings

The S&P 500 Index ($SPX) (SPY) on Monday closed up +0.19%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.19%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.29%.  June E-mini S&P futures (ESM26) rose +0.18%, and June E-mini Nasdaq futures (NQM26) rose +0.28%.

Stock indexes settled higher on Monday, with the S&P 500 and Nasdaq 10 posting new all-time highs amid strong corporate earnings results and resurgent optimism around artificial intelligence.  Strength in chipmakers and AI-infrastructure stocks led the broader market higher on Monday.  Gains in stocks were limited on Monday amid rising oil prices and bond yields after the US and Iran failed to reach terms to end the war in the Middle East. Global bond yields rose on concern that the continued standoff will keep energy prices elevated and could force the world’s central banks to tighten monetary policy.  The 10-year T-note yield rose +5 bp to 4.41%. 

In the latest developments in the Middle East, President Trump and Iran rejected each other's latest peace proposals to end the 10-week conflict.  Iran offered to transfer some of its stockpile of highly enriched uranium to a third country, but rejected the idea of dismantling its nuclear facilities.  Iran also demanded a lifting of the US naval blockade and sanctions relief, while maintaining a degree of control over traffic through the Strait of Hormuz.  Despite the ceasefire in place since last month, a drone strike over the weekend set a cargo vessel ablaze off Qatar in the Persian Gulf.  Also, the United Arab Emirates and Kuwait both said they intercepted hostile drones.

Monday’s US economic news was slightly weaker than expected after Apr existing home sales rose +0.2% m/m to 4.02 million, below expectations of 4.05 million. 

Chinese trade news was better than expected, a positive factor for global growth.  China Apr exports rose +14.1% y/y, stronger than expectations of +8.4% y/y.  Apr imports rose +25.3% y/y, stronger than expectations of 20.0% y/y.

WTI crude oil prices (CLM26) rose more than 2% on Monday, as optimism that the US and Iran would reopen the Strait of Hormuz was dashed after President Trump on Sunday said that Iran's latest peace proposals were "totally unacceptable."  The strait 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 4% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.

Earnings reports thus far in this reporting season have been supportive of stocks.  As of Monday, 83% of the 450 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 settled mixed on Monday.  The Euro Stoxx 50 closed down -0.27%.  China's Shanghai Composite rallied to a 10-year high and closed up +1.08%.  Japan's Nikkei Stock Average fell from a record high and closed down -0.47%.

Interest Rates

June 10-year T-notes (ZNM6) on Monday closed down -11 ticks.  The 10-year T-note yield rose +5.4 bp to 4.408%.  T-notes were under pressure on Monday from a +2% jump in WTI crude oil prices, which boosted inflation expectations.  T-notes fell to their lows on Monday afternoon on weak demand for the Treasury’s $58 billion auction of 3-year T-notes that had a bid-to-cover ratio of 2.54, well below the 10-auction average of 2.64.  

European government bond yields moved higher on Monday.  The 10-year German Bund yield rose +3.5 bp to 3.040%.  The 10-year UK gilt yield rose +8.6 bp to 4.998%.

ECB Governing Council member Martin Kocher said, "If the situation around energy prices does not improve significantly, an interest rate hike will be unavoidable in the near future."

Swaps are discounting an 84% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Chipmakers and AI-infrastructure stocks rose on Monday amid continued optimism over AI infrastructure build-outs.  Qualcomm (QCOM) closed up more than +8% to lead gainers in the Nasdaq 100, and Western Digital (WDC) closed up by more than +7%. Also, Micron Technology (MU) and Seagate Technology Holdings Plc (STX) closed up more than +6%, and NXP Semiconductors NV (NXPI), Intel (INTC), and Texas Instruments (TXN) closed up more than +3%.  In addition, Nvidia (NVDA), Applied Materials (AMAT), and Analog Devices (ADI) closed up more than +1%.

Mining stocks moved higher on Monday amid rallies in silver and copper prices.  Hecla Mining (HL) closed up more than +11%, and Barrick Mining (B) closed up +9%.  Also, Coeur Mining (CDE) closed up more than +6%, and Freeport McMoRan (FCX) closed up more than +4%.  In addition, Newmont Corp (NEM) closed up more than +3%, and Anglogold Ashanti (AU) closed up more than +1%. 

Consumer-exposed stocks retreated on Monday after Wells Fargo warned about weakening consumer demand. Kohl’s (KSS) closed down more than -10% and Dollar General (GD) closed down more than -8% to lead losers in the S&P 500.  Also, Ollie’s Bargain Outlet Holdings (OLLI) closed down more than -8% and Kontoor Brands (KTB) closed down more than -7%.  In addition, Target (TGT) and Celsius Holdings (CELH) closed down more than -6%.

Airline stocks and cruise line operators were under pressure on Monday amid a +2% increase in WTI crude oil prices, which boosts fuel costs and undermines the companies' profitability prospects.  American Airlines Group (AAL), Alaska Air Group (ALK), and Royal Caribbean Cruises Ltd (RCL) closed down more than -4%.  Also, Carnival (CCL) closed down more than -3%, and Norwegian Cruise Line Holdings (NCLH), United Airlines Holdings (UAL), Southwest Airlines (LUV), and Delta Air Lines (DAL) closed down more than -2%. 

Beazer Homes USA Inc (BZH) closed up more than +34% on a report that said Dream Finders Homes is close to announcing a $704 million offer to acquire the company. 

Babcock & Wilcox (BW) closed up more than +30% after reporting Q1 revenue grew 44% year-over-year, and that Q1 Ebitda nearly quadrupled. 

Lumentum Holdings (LITE) closed up more than +16% to lead gainers in the S&P 500 after Nasdaq announced that the stock will replace CoStar Group in the Nasdaq 100 before the market opens on Monday, May 18. 

Coherent Corp (COHR) closed up more than +13% on news that CEO Anderson will travel with President Trump to China this week.

Monday.com (MNDY) closed up more than +5% after reporting Q1 adjusted EPS of $1.15, better than the consensus of 93 cents, and raising its full-year revenue forecast to $1.466 billion to $1.474 billion from a previous forecast of $1.45 billion to $1.46 billion, better than the consensus of $1.46 billion.

Iren Ltd (IREN) closed down more than -10% after announcing that it intends to offer $2 billion of convertible senior notes due 2033 in a private offering. 

Trade Desk (TTD) closed down more than -7% after HSBC downgraded the stock to reduce from hold with a price target of $20.

Wendy’s (WEN) closed down more than -7% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $6.

Dell Technologies (DELL) closed down more than -5% after UBS downgraded the stock to neutral from buy. 

Tyler Technologies (TYL) closed down more than -3% after announcing that it intends to offer $1 billion of convertible senior notes due 2031 in a private offering. 

Mosaic (MOS) closed down nearly -2% after forecasting Q2 phosphate sales of 1.4 million to 1.7 million tons, weaker than the consensus of 1.78 million tons. 

Earnings Reports(5/12/2026)

Aramark (ARMK), Karman Holdings Inc (KRMN), Millicom International Cellular SA (TIGO), On Holding AG (ONON), Qnity Electronics Inc (Q), Ralliant Corp (RAL), Under Armour Inc (UAA), Zebra Technologies Corp (ZBRA).