Stock Index Futures Slip as Tech Selloff Continues, Iran in Focus

June S&P 500 E-Mini futures (ESM26) are down -0.38%, and June Nasdaq 100 E-Mini futures (NQM26) are down -0.65% this morning, pressured by a retreat in technology stocks, while investors await signs of progress toward a peace deal in the Middle East.

The price of WTI crude dropped over -1% on Tuesday after U.S. President Donald Trump said he would postpone a planned U.S. strike on Iran at the request of Gulf leaders to allow room for negotiations with Tehran on a potential deal to end the conflict between the two countries. The U.S. delayed the strikes “for a little while, hopefully maybe forever,” because “we’ve had very big discussions with Iran, and we’ll see what they amount to,” Trump said at the White House on Monday evening. Still, the 10-year T-note yield rose two basis points to 4.62% as oil prices stayed above $100 a barrel, curbing risk appetite.

“The lack of clarity around diplomatic progress and the risk of renewed escalation are still keeping markets cautious,” according to The Revacy Fund’s Zaheer Anwari.

In yesterday’s trading session, Wall Street’s main stock indexes ended mixed. Chip and AI infrastructure stocks cratered, with Seagate Technology Holdings (STX) plunging over -6% and Micron Technology (MU) slumping more than -5%. Also, cryptocurrency-exposed stocks sank after Bitcoin dropped more than -2%, with Strategy (MSTR) sliding over -6% and Coinbase Global (COIN) falling more than -3%. In addition, Regeneron Pharmaceuticals (REGN) tumbled over -9% and was the top percentage loser on the S&P 500 and Nasdaq 100 after a trial assessing the efficacy of its experimental skin cancer drug, fianlimab, failed to demonstrate a statistically significant improvement in progression-free survival. On the bullish side, Dominion Energy (D) climbed over +9% after NextEra Energy confirmed it would acquire the company in an all-stock deal valued at about $67 billion.

“Strong equity markets (outside of Friday’s sell-off), upside inflation surprises, and resilient growth likely cannot coexist indefinitely,” according to Stephanie Roth at Wolfe Research. His view is that “rates likely continue repricing higher until either growth weakens, equities begin to crack more materially, or Trump reaches his pain threshold and takes a deal with Iran.”

Meanwhile, a White House official said on Monday that President Trump will hold a swearing-in ceremony for incoming Fed Chair Kevin Warsh at the White House on Friday. The White House ceremony highlights the close personal interest Trump has taken in the appointment. The previous Fed chair to be sworn in at the White House was Alan Greenspan in 1987.

Today, investors will focus on the National Association of Realtors’ pending home sales data, set to be released in a couple of hours. Economists expect the April figure to rise +1.0% m/m following a +1.5% m/m climb in March.

Market participants will also parse comments today from Fed Governor Christopher Waller and Philadelphia Fed President Anna Paulson.

On the earnings front, home improvement chain The Home Depot (HD), as well as notable companies like Keysight Technologies (KEYS), Toll Brothers (TOL), and Urban Outfitters (URBN), are set to report their quarterly figures today.

U.S. rate futures have priced in a 98.9% chance of no rate change and a 1.1% chance of a 25 basis point rate hike at the next central bank meeting in June.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.62%, up +0.52%.

The Euro Stoxx 50 Index is up +0.89% this morning as oil prices fell amid renewed hopes for a peace deal between the U.S. and Iran. Sentiment improved after U.S. President Donald Trump said on Monday he had canceled a new bombardment of Iran planned for Tuesday after Saudi Arabia and other Persian Gulf allies sought additional time to pursue diplomacy. Defense and travel stocks led the gains on Tuesday. Technology stocks also advanced, with Lagercrantz Group AB (LAGRB.S.DX) climbing over +6% after the company reported stronger-than-expected FQ4 earnings. Data from the Office for National Statistics released on Tuesday showed that the U.K.’s unemployment rate ticked up in the three months through March, with further increases anticipated in the months ahead as the Middle East conflict continues to weigh on the economy. Separate data showed that U.K. annual wage growth, excluding bonuses, eased in the three months to March, lowering the likelihood of the Bank of England raising interest rates in the coming months. Meanwhile, Eurozone government bond yields wavered on Tuesday as investors waited for signs of progress toward a peace deal in the Middle East. Elsewhere, European Union negotiators were expected to agree on Tuesday to eliminate import duties on U.S. goods to comply with the trade deal reached with the U.S. last year and avert U.S. President Trump’s threat of significantly higher tariffs. In other corporate news, Evolution AB (EVO.S.DX) surged over +8% after the Swedish online casino provider unveiled a 2 billion euros ($2.4 billion) share buyback program.

U.K. Average Earnings ex Bonus, U.K. Unemployment Rate, and Eurozone’s Trade Balance data were released today.

U.K. Average Earnings ex Bonus stood at 3.4% in the three months to March, in line with expectations.

The U.K. Unemployment Rate was 5.0% in the three months to March, weaker than expectations of no change at 4.9%.

Eurozone’s March Trade Balance came in at 7.8 billion euros, stronger than expectations of 5.4 billion euros.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.92%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.44%.

China’s Shanghai Composite Index closed higher today, led by gains in semiconductor stocks. Chip and electricity stocks rallied on Tuesday as investors snapped up beneficiaries of the AI boom following a recent pullback. Eastspring Investments analysts said in a note that China’s growth outlook still depends on continued momentum in the AI trade and Chinese firms’ competitive edge, noting that export growth remained strong in April, while retail sales were largely flat and fixed-asset investment contracted. At the same time, rare earth stocks slid after Australia ordered China-backed investors to divest their stakes in a rare-earth project. Meanwhile, investors poured money into China-focused exchange-traded funds at the fastest rate in more than a year last week amid easing U.S.-China trade tensions and a broader rally in AI-related stocks. Over the weekend, China’s Ministry of Commerce said Beijing and Washington will implement a range of measures, including mutual tariff reductions on certain products, to broaden bilateral trade in areas such as agriculture. In corporate news, WuXi XDC Cayman rose over +3% in Hong Kong on plans for up to a $100 million share buyback. Investor attention is now squarely on the People’s Bank of China, which is set to announce the country’s benchmark lending rates on Wednesday. Economists expect the one-year loan prime rate to stay unchanged at 3.00% and the five-year LPR at 3.50%.

Japan’s Nikkei 225 Stock Index reversed earlier gains and closed lower today, dragged down by weakness in the technology sector. The benchmark index initially climbed more than 1% as oil prices fell on hopes of a potential U.S.-Iran peace deal, but later turned lower as chip stocks slid amid higher bond yields, which put a question mark on their valuations. At the same time, value stocks outperformed following stronger-than-expected economic growth data from the country. “The growth was led by consumption. The market confirmed the strength of domestic demand,” said Yugo Tsuboi at Daiwa Securities. Preliminary government data released on Tuesday showed that Japan’s economy grew much faster than expected in the first quarter, supported by solid private consumption and trade. The report bolsters the case for further Bank of Japan interest rate hikes, giving policymakers room to argue that the economy is resilient enough to absorb higher borrowing costs as the central bank seeks to continue policy normalization and tackle rising inflation risks. State Street Investment Management’s Krishna Bhimavarapu said that Japan’s solid first-quarter GDP growth “now makes a June BOJ hike close to a certainty.” Meanwhile, Japanese government bond yields climbed on Tuesday, reversing earlier declines as investors nervously awaited details of the government’s supplementary budget plans. Elsewhere, SMBC Nikko Securities’ Yoshimasa Maruyama said on Tuesday that the Nikkei could climb to around 65,000 by year-end, factoring in recent market momentum and a potential shift in underlying trends driven by a stable, long-term government. Investor focus for the remainder of the week is on Japan’s April inflation data, a key input for BOJ policy as price pressures broaden. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.49% to 30.94.

The Japanese GDP rose +0.5% q/q and +2.1% y/y in the first quarter, stronger than expectations of +0.4% q/q and +1.7% y/y.

The Japanese March Industrial Production was revised higher to -0.4% m/m from the preliminary estimate of -0.5% m/m.

Pre-Market U.S. Stock Movers

Most members of the Magnificent Seven stocks fell in pre-market trading, with Amazon.com (AMZN) and Nvidia (NVDA) slipping more than -1%.

Chip and AI infrastructure stocks are moving lower in pre-market trading, with Sandisk (SNDK) falling nearly -3% and Micron Technology (MU) dropping over -2%.

AI cloud service providers Nebius Group N.V. (NBIS) and CoreWeave (CRWV) slid more than -3% in pre-market trading after Alphabet’s Google agreed to form a rival venture with Blackstone.

Akamai Technologies (AKAM) dropped over -3% in pre-market trading after the company announced a $2.6 billion convertible notes offering.

ServiceNow (NOW) rose about +4% in pre-market trading, extending yesterday's gains after Bank of America reinstated coverage of the stock with a Buy rating and a $130 price target.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - May 19th

The Home Depot (HD), Keysight Technologies (KEYS), Amer Sports (AS), Toll Brothers (TOL), Viasat (VSAT), CAVA Group (CAVA), Eagle Materials (EXP), Urban Outfitters (URBN), Transcat (TRNS), Eagle Point Credit Company (ECC), American Woodmark (AMWD), 8x8, Inc. (EGHT), Eagle Point Income Company (EIC), American Resources (AREC), Ellington Credit Company (EARN), VisionWave Holdings (VWAV).