Stocks Settle Lower on Rising Bond Yields

The S&P 500 Index ($SPX) (SPY) on Tuesday closed down -0.67%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -0.65%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.61%.  June E-mini S&P futures (ESM26) fell -0.70%, and June E-mini Nasdaq futures (NQM26) fell -0.63%.

Stock indexes finished lower on Tuesday, 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 on Tuesday sparked risk-off sentiment in asset markets, prompting a wave of stock liquidation.  The 10-year T-note yield climbed to a 16-month high of 4.69% on Tuesday.

Tuesday’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. 

WTI crude oil prices (CLM26) remain extremely volatile and are susceptible to headlines from the Iran war.  Prices fell nearly -1% on Tuesday after President Trump said that Iran is "being reasonable" and that he will "maybe" give them until early next week to make a peace deal.  Late Monday, 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.  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 6% 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 settled mixed on Tuesday.  The Euro Stoxx 50 closed up +0.04%.  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) on Tuesday closed down -10 ticks.  The 10-year T-note yield rose +7.8 bp to 4.665%.  Jun T-notes tumbled to a 15-month low on Tuesday, 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 Tuesday’s stronger-than-expected Apr pending home sales report.

European government bond yields moved higher on Tuesday.  The 10-year German Bund yield climbed to a 15-year high of 3.201% and finished up +4.5 bp to 3.193%.  The 10-year UK gilt yield rose +3.0 bp to 5.129%.

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 an 89% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Chipmakers fell on Tuesday, weighing on the overall market.  Qualcomm (QCOM) closed down more than -3%, and Broadcom (AVGO) closed down more than -2%.  Also, Applied Materials (AMAT), Lam Research (LRCX), Advanced Micro Devices (AMD), Nvidia (NVDA), Seagate Technology Holdings Plc (STX), Analog Devices (ADI), ASML Holding NV (ASML), and Microchip Technology (MCHP) closed down more than -1%.

Mining stocks slumped on Tuesday after gold, silver, and copper prices fell sharply.  Hecla Mining (HL) closed down more than -5%, and Coeur Mining (CDE), Newmont Corp (NEM), and Anglogold Ashanti (AU) closed down more than -4%.  Also, Freeport McMoRan (FCX) and Barrick Mining (B) closed down more than -2%, and Southern Copper (SCCO) closed down more than -1%.

Airline stocks and cruise line operators retreated on Tuesday amid concerns over higher fuel costs. Carnival (CCL) closed down more than -4%, and United Airlines Holdings (UAL), Delta Air Lines (DAL), Alaska Air Group (ALK), and Norwegian Cruise Line Holdings (NCLH) closed down more than -3%.  Also, American Airlines Group (AAL), Southwest Airlines (LUV), and Royal Caribbean Cruises (RCL) closed down more than -2%. 

AI-infrastructure stocks recovered from early losses and moved higher on Tuesday, lifting the Nasdaq 100 from its worst level.  Marvell Technology (MRVL) closed up more than +4% to lead gainers in the Nasdaq 100, and Sandisk (SNDK) and ARM Holdings Plc (ARM) closed up more than +3%.  Also, Micron Technology (MU) and Intel (INTC) closed up more than +2%. 

Akamai Technologies (AKAM) closed down more than -6% to lead losers in the S&P 500 after S&P Global Ratings downgraded the company’s credit rating to BBB- from BBB with a negative outlook.

DoorDash (DASH) closed down more than -4% to lead losers in the Nasdaq 100 after Business Insider X posted that Walmart’s Spark services now include delivering food from in-store restaurants like McDonald’s.

SiTime Corp (SITM) closed down more than -4% after announcing that it intends to offer $1.1 billion aggregate principal amount of convertible senior notes due 2031 in an underwritten offering. 

CoreWeave (CRWV) closed down more than -3% after Alphabet agreed to create an artificial intelligence cloud business with Blackstone, aiming to compete with CoreWeave.

XP Inc (XP) closed down more than -2% after reporting Q1 net income of 1.31 billion reals, below expectations of 1.36 billion reals. 

Agilysys (AGYS) closed up more than +12% after forecasting full-year revenue of $365 million to $370 million, stronger than the consensus of $363.5 million. 

Ciena Corp (CIEN) closed up more than +3% after Citigroup raised its price target on the stock to $658 from $345.

Amer Sports (AS) closed up more than +2% after reporting Q1 revenue of $1.95 billion, above the consensus of $1.84 billion.

Stubhub (STUB) closed up more than +2% after Guggenheim Securities upgraded the stock to a buy from neutral with a price target of $12.50.

Earnings Reports(5/20/2026)

Analog Devices Inc (ADI), elf Beauty Inc (ELF), Intuit Inc (INTU), Lowe's Cos Inc (LOW), Nordson Corp (NDSN), NVIDIA Corp (NVDA), Roivant Sciences Ltd (ROIV), Target Corp (TGT), TJX Cos Inc/The (TJX), VF Corp (VFC).