Stocks Retreat as Oil Prices Surge and Inflation Accelerates

The S&P 500 Index ($SPX) (SPY) today is down -0.74%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.55%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.45%.  June E-mini S&P futures (ESM26) are down -0.74%, and June E-mini Nasdaq futures (NQM26) are down -1.43%.

Stock indexes are under pressure today as weakness in technology stocks weighs on the overall market, following Monday’s rally that pushed the S&P 500 and Nasdaq 100 to new record highs.  The ongoing stalemate in the Middle East between the US and Iran is keeping the Strait of Hormuz closed, weighing on market sentiment, and pushing crude oil prices and bond yields higher.  The 10-year T-note yield is up +4 bp to 4.45%.

Stock indexes added to their losses today on signs of accelerating inflation after the US Apr CPI rose 3.8% y/y, stronger than the 3.7% y/y expected and the largest increase in almost 3 years.  Also, Apr core CPI rose +2.8% y/y, stronger than expectations of +2.7% y/y and the largest increase in six months.

Hawkish comments today from Chicago Fed President Austan Goolsbee were bearish for stocks and bonds, as he said the worst part of today's April CPI report is services inflation and that "the Fed has got to be thinking about how do we break the chain of escalating inflation." 

In the latest developments in the Middle East, President Trump called Iran's response to his peace proposal a "piece of garbage" and said that the current ceasefire was on "life support."

WTI crude oil prices (CLM26) are up more than 3% today, as President Trump cast doubt over the ceasefire with Iran, saying the truce was on “massive life support,” prolonging the closure of the Strait of Hormuz.  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 today, 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 are mixed today.  The Euro Stoxx 50 is down -1.19%.  China's Shanghai Composite fell from a 10-year high and closed down -0.25%.  Japan's Nikkei Stock Average closed up +0.52%.

Interest Rates

June 10-year T-notes (ZNM6) today are down -10 ticks.  The 10-year T-note yield is up +3.9 bp to 4.453%.  Jun T-notes fell to a 1-week low today, and the 10-year T-note yield rose to a 1-week high of 4.456%.  T-notes are under pressure today amid a +3% surge in WTI crude oil prices, which is boosting inflation expectations.  Also, today’s stronger-than-expected US April CPI reports signal accelerating inflation, a bearish factor for T-notes.  In addition, supply pressures are weighing on T-notes as the Treasury will auction $42 billion of 10-year T-notes later today as part of this week’s $125 billion quarterly refunding.  T-notes added to their losses today when Chicago Fed President Austan Goolsbee said the US has an inflation problem. 

European government bond yields are moving higher today.  The 10-year German Bund yield rose to a 1.5-week high of 3.105% and is up +5.7 bp to 3.097%.  The 10-year UK gilt yield surged to a 17-year high of 5.135% and is up +10.0 bp to 5.098%.

The German May ZEW survey expectation of economic growth unexpectedly rose +7.0 to -10.2, stronger than expectations of a decline to -19.5.

ECB Governing Council member Christodoulos Patsalides said, "As things stand, inflation risks are worsening," which points to an ECB interest rate hike in June.

Swaps are discounting an 85% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Chipmakers are on the defensive today, giving back some of Monday’s sharp gains as the AI infrastructure rally cools.  Qualcomm (QCOM) is down more than -9% to lead losers in the S&P 500 and Nasdaq 100, and Sandisk (SNDK) and Intel (INTC) are down more than -7%.  Also, Micron Technology (MU) is down more than -5%, and Western Digital (WDC), Applied Materials (AMAT), Seagate Technology Holdings Plc (STX), Marvell Technology (MRVL), and Lam Research (LRCX) are down more than -4%.  In addition, Advanced Micro Devices (AMD), ASML Holding NV (ASML), KLA Corp (KLAC), and NXP Semiconductors NV (NXPI) are down more than -3%.   

Airline stocks and cruise line operators are sliding today amid a +3% increase in WTI crude oil prices, which are boosting fuel costs and undermining the companies' profitability prospects.  American Airlines Group (AAL), Alaska Air Group (ALK), Southwest Airlines (LUV), and Carnival (CCL) are down more than -2%.  Also, Royal Caribbean Cruises Ltd (RCL), Norwegian Cruise Line Holdings (NCLH), United Airlines Holdings (UAL), and Delta Air Lines (DAL) are down more than -1%. 

Power Solutions International (PSIX) is down more than -34% after reporting Q1 revenue of $128.6 million, well below the consensus of $161 million. 

AST SpaceMobile (ASTS) is down more than -12% after reporting a Q1 net loss of -$191.0 million, a wider loss than expectations of -$76.3 million. 

Hims & Hers Health (HIMS) is down more than -11% after reporting Q1 revenue of $608.1 million, weaker than the consensus of $617.5 million, and forecasting full-year adjusted Ebitda of $275 million to $350 million, the midpoint below the consensus of $319.3 million. 

Webtoon Entertainment (WBTN) is down more than -8% after forecasting Q2 revenue of $332 million to $342 million, well below the consensus of $359.9 million. 

ON Holding (ONON) is down more than -6% after forecasting full-year net sales at constant currencies of at least +23%, weaker than the consensus of +24.6%. 

Gitlab (GTLB) is down by more than -5% after announcing plans to cut jobs and make operational changes, moves Raymond James said will be challenging. 

West Pharmaceutical Services (WST) is down more than -3% after saying it has experienced a material cybersecurity attack that has disrupted operations globally.

PACS Group (PACS) is up more than +20% after reporting Q1 revenue of $1.42 billion, stronger than the consensus of $1.36 billion, and raising its full-year Ebitda forecast to $605 million-$625 million from a previous forecast of $555 million-$575 million, well above the consensus of $567 million. 

Zebra Technologies (ZBRA) is up more than +17% to lead gainers in the S&P 500 after reporting Q1 adjusted EPS of $4.75, stronger than the consensus of $4.25, and raising its full-year adjusted EPS forecast to $18.30 to $18.70 from a previous forecast of $17.70 to $18.30. 

Wendy’s (WEN) is up more than +14% after the Financial Times reported that Trian Fund Management is seeking investor backing for a bid to take the company private. 

Venture Global (VG) is up more than +11% after reporting Q1 adjusted net income of $488.0 million, well above the consensus of $337.2 million. 

Qnity Electronics (Q) is up more than +4% after reporting Q1 net sales of $1.42 billion, above the consensus of $1.27 billion. 

Steris Plc (STE) is up more than +2% after forecasting 202y adjusted EPS from continuing operations of $11.10 to $11.30, above the consensus of $11.08. 

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).