Stocks Pressured by a Rebound in Crude Prices and Bond Yields

The S&P 500 Index ($SPX) (SPY) today is down -0.20%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.57%.  June E-mini S&P futures (ESM26) are down -0.28%, and June E-mini Nasdaq futures (NQM26) are down -0.57%.

Stock indexes gave up an early advance today and turned lower as crude oil prices whipsawed higher amid the stalemate between the US and Iran that has kept the Strait of Hormuz closed.  Crude prices recovered from early losses and pushed back into positive territory today when Iran said, despite draft changes, US demands for ending the war were "excessive and unrealistic." The rebound in crude oil prices pushed bond yields higher, weighing on stocks as the 10-year T-note yield climbed to a 15-month high today at 4.63%.

Stocks briefly moved higher today when crude oil prices temporarily fell more than -1% on hopes for a breakthrough in the standoff between the US and Iran over the Strait of Hormuz.  Crude prices retreated today after Tasnim, Iran's semi-official news agency, reported that the US has proposed a temporary waiver on Iran oil sanctions until a final peace agreement is reached.

Comments from President Trump on Sunday weighed on stocks and boosted crude oil prices when he said the "clock is ticking" on Iran and it "better get moving FAST on a peace deal, or there won't be anything left of them."  Also, ramped-up geopolitical tensions weighed on stocks after Reuters reported that Pakistan has deployed 8,000 troops, a squadron of fighter jets, and an air defense system to Saudi Arabia as part of a mutual defense pact, a deployment described as a "substantial, combat-capable force" to support Saudi Arabia if it comes under further attack. 

Today’s US economic news was supportive for stocks after the May NAHB housing market index rose +3 to 37, stronger than expectations of no change at 34.

Weaker-than-expected economic news from China is bearish for global growth prospects.  China Apr industrial production rose +4.1% y/y, weaker than expectations of +6.0% y/y. Also, China Apr retail sales rose +0.2% y/y, weaker than expectations of +2.0% y/y.  In addition, China Apr new home prices fell -0.19% y/y, the thirty-fifth consecutive month that prices have declined.

WTI crude oil prices (CLM26) have been volatile today, rising to a 2-week high after Reuters reported that Pakistan has deployed troops and jets to Saudi Arabia as part of a mutual defense pact. Also, comments today from Iran that US demands for ending the war were “excessive and unrealistic” boosted crude prices. Crude prices initially fell by more than -1% today after Tasnim, Iran's semi-official news agency, reported that the US has proposed a temporary waiver on Iran oil sanctions until a final peace agreement is reached.  On Sunday, the United Arab Emirates (UAE) reported that a drone sparked a fire in a power station at the UAE’s Barakah nuclear plant, and Saudi Arabia said it intercepted and destroyed three drones that entered its airspace.  Last Wednesday, the International Energy Agency (IEA) said in a monthly report that global oil inventories declined at a rate of about 4 million bpd in March and April, and the market will remain “severely undersupplied” until October even if the conflict ends next month.  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 3% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.

Earnings season is winding down, though reports thus far have been supportive of stocks.  As of today, 83% of the 454 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 rebounded from a 1.5-week low and is up +0.45%.  China's Shanghai Composite dropped to a 2-week low and closed down -0.09%.  Japan's Nikkei Stock Average fell to a 1-week low and closed down -0.97%.

Interest Rates

June 10-year T-notes (ZNM6) today are down by -1 tick.  The 10-year T-note yield is up +0.3 bp to 4.596%.  Jun T-notes slid to a 15-month low today, and the 10-year T-note yield rose to a 15-month high of 4.631%.  Today’s increase in WTI crude oil to a 2-week high raises inflation expectations and is bearish for T-notes.  The 10-year breakeven inflation rate rose to a 3-year high of 2.530% today.  T-notes also came under pressure today after the May NAHB housing market index unexpectedly strengthened.  Losses in T-notes are limited after crude oil prices fell from their best level, following Reuters' report that the US proposed a temporary waiver on Iran oil sanctions.

European government bond yields are moving lower today.  The 10-year German Bund yield fell from a 15-year high of 3.195% and is down -0.5 bp to 3.162%.  The 10-year UK gilt yield fell from a nearly 18-year high of 5.189% and is down -3.0 bp to 5.142%.

Swaps are discounting an 87% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Chipmakers and AI infrastructure stocks gave up an early advance today and turned lower, weighing on the overall market.  Seagate Technology Holdings Plc (STX) is down more than -6%, and Sandisk (SNDK) and Western Digital (WDC) are down more than -5%.  Also, Applied Materials (AMAT) is down more than -4%, and Micron Technology (MU), Marvell Technology (MRVL), KLA Corp (KLAC), and Qualcomm (QCOM) are down more than -2%.  In addition, Lam Research (LRCX), ASML Holding NV (ASML), Advanced Micro Devices (AMD), and Broadcom (AVGO) are down more than -1%. 

Cryptocurrency-exposed stocks are sliding today, with Bitcoin (^BTCUSD) down more than -3% at a 2-week low.  Strategy (MSTR) is down more than -8%, and Galaxy Digital Holdings (GLXY) is down more than -6%.  Also, MARA Holdings (MARA) is down more than -5%, Coinbase Global (COIN) is down more than -4%, and Riot Platforms (RIOT) is down more than -1%.

Zscaler (ZS) is up more than +6% to lead cybersecurity stocks higher after B Riley Securities upgraded the stock to buy from neutral with a price target of $225.  Also, Okta (OKTA) is up more than +3%, and CrowdStrike Holdings (CRWD) is up more than +2%. In addition, Palo Alto Networks (PANW), Cloudflare (NET), and Fortinet (FTNT) are up more than +1%.

Regeneron Pharmaceuticals (REGN) is down more than -10% to lead losers in the S&P 500 and Nasdaq 100 after reporting its data from a Phase 3 trial of its fianlimab for treatment of metastatic melanoma fell short of expectations.

Hims & Hers Health (HIMS) is down more than -8% after saying it intends to offer $300 million aggregate principal amount of convertible senior notes due 2032 in a private placement. 

Mobileye (MBLY) is down more than -7% after Jeffries initiated coverage on the stock with a recommendation of underperform and a price target of $8.

UnitedHealth Group (UNH) is down more than -2% after Berkshire Hathaway exited its stake in the company.

LiveRamp Holdings (RAMP) is up more than +27% after Publicis Groupe SA agreed to buy the company for about $2.5 billion in cash, or about $38.50 per share.

Dominion Energy (D) is up more than +10% to lead gainers in the S&P 500 on reports that NextEra Energy is discussing a stock deal for the company that would value it at about $76 a share or around $66 billion.

Bio-Rad Laboratories (BIO) is up more than +10% after the Wall Street Journal reported that Elliot Investment Management has built a sizable stake in the company. 

VF Corp (VFC) is up more than +2% after Williams Trading LLC double-upgraded the stock to buy from sell with a price target of $19. 

Earnings Reports(5/18/2026)

Agilysys Inc (AGYS), James Hardie Industries PLC (JHX), XP Inc (XP).