Stocks Settle Mixed as Iran War Remains Unresolved

The S&P 500 Index ($SPX) (SPY) on Monday closed down -0.07%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.32%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.45%.  June E-mini S&P futures (ESM26) fell -0.12%, and June E-mini Nasdaq futures (NQM26) fell -0.48%.

Stock indexes gave up an early advance on Monday and settled mixed as crude oil prices whipsawed between gains and losses amid the stalemate between the US and Iran that has kept the Strait of Hormuz closed.  Crude prices recovered from early losses and climbed to a 3-week high on Monday 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 of 4.63%.

However, stocks bounced off their lows as crude oil prices tumbled more than -$2 a barrel Monday afternoon in post-market trading when President Trump said he canceled a scheduled attack on Iran on Tuesday after he was asked by leaders of Saudi Arabia, Qatar, and the United Arab Emirates to hold off for more time to pursue a diplomatic resolution.

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. 

Monday’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) were extremely volatile on Monday, rising more than +3% to a 3-week high after Reuters reported that Pakistan has deployed troops and jets to Saudi Arabia as part of a mutual defense pact.  Also, comments on Monday from Iran that US demands for ending the war were “excessive and unrealistic” boosted crude prices.  However, crude prices fell sharply Monday afternoon when President Trump said he called off a strike on Iran scheduled for Tuesday after Gulf allies asked for more time to give diplomacy a chance.  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 0% 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 Monday, 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 settled mixed on Monday.  The Euro Stoxx 50 rebounded from a 1.5-week low and closed up +0.36%.  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) on Monday closed down by -5 ticks.  The 10-year T-note yield rose +1.7 bp to 4.606%.  Jun T-notes slid to a 15-month low on Monday, and the 10-year T-note yield rose to a 15-month high of 4.631%.  Monday’s sharp rally in WTI crude oil to a 3-week high raised inflation expectations and is bearish for T-notes.  The 10-year breakeven inflation rate rose to a 3-year high of 2.530% on Monday. T-notes also came under pressure on Monday after the May NAHB housing market index unexpectedly strengthened. Losses in T-notes were limited after crude oil prices fell from their best level on Monday afternoon when President Trump said he canceled a planned strike against Iran for Tuesday.

European government bond yields moved lower on Monday.  The 10-year German Bund yield fell from a 15-year high of 3.195% and finished down -1.9 bp to 3.148%.  The 10-year UK gilt yield fell from a nearly 18-year high of 5.189% and finished down -7.4 bp to 5.098%.

Swaps are discounting an 88% 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 on Monday and turned lower, weighing on the overall market.  Seagate Technology Holdings Plc (STX) closed down more than -6%, and Micron Technology (MU), Sandisk (SNDK), and Applied Materials (AMAT) closed down more than -5%.  Also, Western Digital (WDC) and Marvell Technology (MRVL) closed down more than -4%, and KLA Corp (KLAC) and Lam Research (LRCX) closed down more than -2%.  In addition, Nvidia (NVDA), ASML Holding NV (ASML), Broadcom (AVGO), and Microchip Technology (MCHP) closed down more than -1%. 

Cryptocurrency-exposed stocks retreated on Monday as Bitcoin (^BTCUSD) fell more than -2% to a 2-week low.  Strategy (MSTR) and Galaxy Digital Holdings (GLXY) closed down more than -5%.  Also, Coinbase Global (COIN) closed down more than -3%, MARA Holdings (MARA) closed down more than -2%, and Riot Platforms (RIOT) closed down more than -1%.

Zscaler (ZS) closed up more than +8% 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) closed up more than +5%, and CrowdStrike Holdings (CRWD) closed up more than +4%.  In addition, Fortinet (FTNT) closed up more than +3%, Cloudflare (NET) closed up more than +2%, and Palo Alto Networks (PANW) closed up more than +1%. 

Hims & Hers Health (HIMS) closed down more than -10% after saying it intends to offer $300 million aggregate principal amount of convertible senior notes due 2032 in a private placement. 

Regeneron Pharmaceuticals (REGN) closed down more than -9% 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.

Mobileye (MBLY) closed down more than -6% after Jeffries initiated coverage on the stock with a recommendation of underperform and a price target of $8.

LiveRamp Holdings (RAMP) closed 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.

Bio-Rad Laboratories (BIO) closed up more than +13% after the Wall Street Journal reported that Elliot Investment Management has built a sizable stake in the company. 

Dominion Energy (D) closed up more than +9% 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.

Cognizant Technology Solutions (CTSH) closed up more than +9% to lead gainers in the Nasdaq 100 after its board authorized a $1 billion increase in its existing share repurchase program to $2 billion.

Boston Scientific (BSX) closed up more than +6% after it said it entered into a $2 billion accelerated share repurchase agreement with JPMorgan Chase as part of its previously announced $5 billion share repurchase authorization. 

Earnings Reports(5/19/2026)

Amer Sports Inc (AS), Cava Group Inc (CAVA), Eagle Materials Inc (EXP), Home Depot Inc/The (HD), Keysight Technologies Inc (KEYS), Toll Brothers Inc (TOL).