Rising Bond Yields Weigh on Stocks

The S&P 500 Index ($SPX) (SPY) today is down -0.68%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.34%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.95%.  June E-mini S&P futures (ESM26) are down -0.75%, and June E-mini Nasdaq futures (NQM26) are down -1.02%.

Stock indexes are retreating today, with the S&P 500 and Nasdaq 100 falling to 1.5-week lows, and the Dow Jones Industrial Average to a 2-week low. The recent rally in technology stocks, fueled by the buildout of artificial intelligence, is faltering after powering the S&P 500 and Nasdaq 100 to record highs last week.  Rising bond yields and elevated crude oil prices have sparked risk-off sentiment in asset markets, leading to long liquidation in stocks.  The 10-year T-note yield climbed to a 16-month high of 4.69% today.

Today’s US economic news was supportive for stocks after Apr pending home sales rose by +1.4% m/m, beating expectations of +1.0% m/m.  Also, Mar pending home sales were revised upward to +1.7% m/m from the previously reported +1.5% m/m.  In addition, software stocks are climbing today, lending some support to the overall market.

WTI crude oil prices (CLM26) remain extremely volatile and are susceptible to headlines from the Iran war.  Prices are down more than -1% today after President Trump late Monday said he called off a strike on Iran scheduled for Tuesday after Gulf allies asked for more time to give diplomacy a chance.  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 4% 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 is up +0.08%.  China's Shanghai Composite recovered from a 2.5-week low and closed up +0.92%.  Japan's Nikkei Stock Average fell to a 1.5-week low and closed down -0.44%.

Interest Rates

June 10-year T-notes (ZNM6) today are down -11 ticks.  The 10-year T-note yield is up +8.7 bp to 4.674%.  Jun T-notes tumbled to a 15-month low today, and the 10-year T-note yield rose to a 16-month high of 4.685%.  T-note prices are under pressure over concerns that still-elevated energy prices will boost inflation and push the Fed to pursue tighter monetary policy.  T-notes added to their losses on today’s stronger-than-expected Apr pending home sales report.

European government bond yields are moving higher today.  The 10-year German Bund yield climbed to a 15-year high of 3.201% and is up +4.6 bp to 3.194%.  The 10-year UK gilt yield is up +3.2 bp to 5.130%.

UK Apr payrolled employees fell by -100,000, a bigger decline than expectations of -10,000.  The Mar ILO unemployment rate unexpectedly rose +0.1 to 5.0%, showing a weaker labor market than expectations of no change at 4.9%.

Swaps are discounting a 91% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Chipmakers and AI infrastructure stocks are moving lower today, weighing on the overall market. Seagate Technology Holdings Plc (STX) is down more than -5% to lead losers in the Nasdaq 100.  Also, Qualcomm (QCOM), Western Digital (WDC), and Advanced Micro Devices (AMD) are down more than -4%, and Intel (INTC) and Lam Research (LRCX) are down more than -3%.  In addition, Applied Materials (AMAT), Broadcom (AVGO), and KLA Corp (KLAC) are down more than -2%, and Analog Devices (ADI), Microchip Technology (MCHP), Sandisk (SNDK), and Texas Instruments (TXN) are down more than -1%. 

Minin stocks are slumping today, with gold, silver, and copper prices sharply lower.  Anglogold Ashanti (AU) is down more than -6%, and Hecla Mining (HL) is down more than -5%.  Also, Coeur Mining (CDE) and Newmont Corp (NEM) are down more than -4%, and Freeport McMoRan (FCX) is down more than -3%.  In addition, Southern Copper (SCCO) and Barrick Mining (B) are down more than -2%.

Airline stocks and cruise line operators are retreating today on concerns over higher fuel costs. United Airlines Holdings (UAL), Alaska Air Group (ALK), Carnival (CCL), and Royal Caribbean Cruises (RCL) are down more than -3%.  Also, American Airlines Group (AAL), Southwest Airlines (LUV), and Delta Air Lines (DAL) are down more than -2%, and Norwegian Cruise Line Holdings (NCLH) is down more than -1%.

Housing stocks and building suppliers are falling today after the 10-year T-note yield jumped to a 16-month high, which raises mortgage rates and is negative for housing demand. Builders Firstsource (BLDR) is down more than -3%, and KB Home (KBH) and Toll Brothers (TOL) are down more than -2%.  Also, Lennar (LEN), Pulte Group (PHM), and DR Horton (DHI) are down more than -1%. 

Strength in software stocks is a supportive factor for the broader market.  Workday (WDAY) is up more than +3%, and Salesforce (CRM) is up more than +2% to lead gainers in the Dow Jones Industrials.  Also, ServiceNow (NOW), Intuit (INTU), Adobe Systems (ADBE), and Autodesk (ADSK) are up more than +1%.  In addition, Datadog (DDOG) is up +0.80%.

CoreWeave (CRWV) is down more than -7% after Alphabet agreed to create an artificial intelligence cloud business with Blackstone, aiming to compete with CoreWeave.

SiTime Corp (SITM) is down more than -6% after announcing that it intends to offer $1.1 billion aggregate principal amount of convertible senior notes due 2031 in an underwritten offering. 

XP Inc (XP) is down more than -4% after reporting Q1 net income of 1.31 billion reals, below expectations of 1.36 billion reals. 

Agilysys (AGYS) is up more than +14% after forecasting full-year revenue of $365 million to $370 million, stronger than the consensus of $363.5 million. 

Relay Therapeutics (RLAY) is up more than +9% after giving positive initial clinical data from a mid-stage trial of its zovegalisib to treat patients with PIK3CA-driven vascular anomalies, in which TD Cowen said was the “best case scenario.” 

Stubhub (STUB) is up more than +5% after Guggenheim Securities upgraded the stock to a buy from neutral with a price target of $12.50.

Amer Sports (AS) is up more than +4% after reporting Q1 revenue of $1.95 billion, above the consensus of $1.84 billion.

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).