Stocks Slip Before the Open as Oil Rises on U.S.-Iran Peace Deal Uncertainty, PMI Data in Focus

June S&P 500 E-Mini futures (ESM26) are down -0.40%, and June Nasdaq 100 E-Mini futures (NQM26) are down -0.55% this morning as oil prices and bond yields climbed, with investors watching to see whether hopes for a peace deal in the Middle East will turn into tangible progress.

Oil prices were volatile on Thursday, fluctuating between gains and losses as investors remained highly sensitive to Iran-related headlines. The price of WTI crude rose over +2% after Reuters reported that Iran’s Supreme Leader said the country’s uranium must stay within its borders. Earlier, the Iranian Students’ News Agency reported that Tehran is preparing a response to a text submitted by the U.S., which “has narrowed the gaps to some extent.” U.S. President Donald Trump said on Wednesday that talks with Iran were in the “final stages” but warned that the U.S. would have to get “a little bit nasty” if no agreement is reached. The 10-year T-note yield rose three basis points to 4.62% as higher oil prices fueled inflation concerns.

Investors also digested earnings from AI bellwether Nvidia. Shares of the chipmaker rose about +0.1% in pre-market trading after it posted upbeat Q1 results and issued strong Q2 revenue guidance. The company also raised its quarterly dividend to 25 cents per share from one cent and announced an $80 billion stock buyback program. However, the chip giant’s results failed to spark further gains in the AI trade.

Investors are now awaiting a slew of U.S. economic data, with particular attention on S&P Global’s preliminary PMI readings.

In yesterday’s trading session, Wall Street’s three main equity benchmarks ended in the green. Chip stocks rallied, with Arm Holdings (ARM) surging over +15% to lead gainers in the Nasdaq 100 and Advanced Micro Devices (AMD) climbing more than +8%. Also, travel stocks popped as oil prices slumped, with United Airlines Holdings (UAL) jumping about +10% to lead gainers in the S&P 500 and Carnival (CCL) rising nearly +9%. In addition, Toll Brothers (TOL) climbed more than +9% after the luxury home builder reported better-than-expected FQ2 results and raised the lower end of its full-year deliveries guidance. On the bearish side, Hasbro (HAS) sank over -8% and was the top percentage loser on the S&P 500 after the toy and game maker maintained its full-year revenue growth guidance that was on the low end of what analysts expected.

Meanwhile, minutes of the Federal Open Market Committee’s April 28-29 meeting, released on Wednesday, showed that a majority of officials cautioned that the central bank would likely need to consider raising interest rates if inflation continued to run persistently above its target. Although several policymakers indicated that rate cuts could eventually be warranted, most participants at the meeting instead emphasized that “some policy firming would likely become appropriate if inflation were to continue to run persistently above 2%,” according to the FOMC minutes. To account for the possibility of rate hikes, “many participants indicated that they would have preferred removing the language from the post-meeting statement that suggested an easing bias regarding the likely direction of the committee’s future interest rate decisions,” the minutes said. Overall, the minutes highlighted growing concern among Fed officials about inflationary pressures stemming from the Iran war.

U.S. rate futures have priced in a 96.7% chance of no rate change and a 3.3% chance of a 25 basis point rate cut at June’s monetary policy meeting.

Today, investors will focus on preliminary U.S. purchasing managers’ surveys, set to be released in a couple of hours. The surveys will provide an important update on how the U.S. economy is performing in the third month of the Middle East conflict. Economists expect the May S&P Global Manufacturing PMI to be 53.8 and the S&P Global Services PMI to be 51.1, compared to the previous values of 54.5 and 51.0, respectively.

U.S. Initial Jobless Claims data will also be released today. Economists project this figure to be 210K, compared to last week’s number of 211K.

The U.S. Philadelphia Fed Manufacturing Index will come in today. Economists anticipate that the Philly Fed manufacturing index will stand at 17.6 in May, compared to last month’s value of 26.7.

U.S. Building Permits (preliminary) and Housing Starts data will be released today as well. Economists expect April Building Permits to be 1.380 million and Housing Starts to be 1.420 million, compared to the March figures of 1.363 million and 1.502 million, respectively.

In addition, market participants will be looking toward a speech from Richmond Fed President Tom Barkin.

On the earnings front, consumer bellwether Walmart (WMT), along with notable companies like Deere & Company (DE), Ross Stores (ROST), and Take-Two Interactive Software (TTWO), are set to report their quarterly results today.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.62%, up +0.61%.

The Euro Stoxx 50 Index is down -0.59% this morning, giving back earlier gains amid uncertainty surrounding the U.S.-Iran peace deal. Losses in bank stocks weighed on the index on Thursday. A survey released on Thursday showed that economic activity in the Eurozone contracted at its fastest pace in more than 2-1/2 years in May, as the Iran war-driven surge in living costs battered demand for services and pushed overall input price inflation to its highest level in 3-1/2 years. “May’s flash PMI survey data show the euro zone economy taking an increasingly severe toll from the war in the Middle East,” said Chris Williamson at S&P Global Market Intelligence. Williamson noted that the survey data indicate the Eurozone economy appears on track to shrink 0.2% in the second quarter. Meanwhile, the European Commission, in its twice-yearly report, lowered its forecast for Eurozone economic growth in 2026 to 0.9% from 1.2% and raised its inflation projection for this year to 3.0% from 1.9% as the energy-price shock from the Middle East conflict ripples through the economy. European Central Bank Governing Council member Olli Rehn said on Thursday that the central bank may raise interest rates to safeguard credibility in the face of the war-driven surge in fuel costs, but there is little evidence so far that high inflation is becoming entrenched in the Eurozone. Reuters reported that the case for an ECB rate hike in June was almost locked in, but the bank is likely to remain noncommittal about any additional move. In corporate news, Ubisoft (UBI.FP) plunged over -17% after the Assassin’s Creed maker said it now expects to reach its profitability and cash-generation targets a year later than previously planned amid an operational overhaul.

Eurozone’s Composite PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), Eurozone’s Services PMI (preliminary), and Eurozone’s Current Account data were released today.

Eurozone’s May Composite PMI has been reported at 47.5, weaker than expectations of 48.8.

Eurozone’s May Manufacturing PMI came in at 51.4, weaker than expectations of 51.7.

Eurozone’s May Services PMI arrived at 46.4, weaker than expectations of 47.8.

Eurozone’s March Current Account stood at 14.9 billion euros, weaker than expectations of 26.3 billion euros.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -2.04%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +3.14%.

China’s Shanghai Composite Index gave up earlier gains and closed sharply lower today due to profit-taking in the technology sector. Semiconductor and other AI-related stocks initially climbed following Nvidia’s blockbuster earnings, but later erased their gains and tumbled as investors opted to lock in profits after a recent rally. The Shanghai Composite Index slipped below the 4,100-point mark in its largest single-day drop since March 23rd. Kenny Ng, securities strategist at Everbright Securities International, noted that the pullback in AI and chip stocks could continue in the near term, exacerbated by disappointing economic data released earlier in the week, adding that the benchmark index could test the 4,000 level. Investors also kept a close eye on developments in U.S.-Iran negotiations. U.S. President Trump said on Wednesday that talks with Iran were in the “final stages” but warned that the U.S. would have to get “a little bit nasty” if no agreement is reached. Meanwhile, foreign investors flowed back into Chinese stocks in April, signaling renewed appetite for the market after an initial selloff sparked by the Iran war. Bloomberg reported that estimated net inflows into mainland equities reached about 200 billion yuan ($29 billion) last month. Elsewhere, Chinese leader Xi Jinping is reportedly set to visit North Korea as soon as next week, marking his first trip there in seven years.

Japan’s Nikkei 225 Stock Index closed sharply higher today as investors flocked back to the AI trade. Technology stocks rallied on Thursday, with SoftBank Group jumping over +19% after The Wall Street Journal reported that OpenAI, one of its core investments, was preparing to file for an initial public offering in the coming days or weeks. A labor-dispute settlement at Samsung Electronics and strong quarterly results from AI chip leader Nvidia also boosted sentiment toward the sector. Easing geopolitical tensions added to the risk-on tone on Thursday, with U.S. President Donald Trump saying the U.S. was in the “final stages” of negotiations with Iran. Meanwhile, Bank of Japan board member Junko Koeda said on Thursday that the central bank should raise interest rates at an “appropriate pace” as price pressures from the Middle East conflict could push underlying inflation above its 2% target, providing another signal that rate hikes may be imminent. Despite Koeda’s hawkish remarks, Japanese government bonds climbed for a second consecutive day, tracking gains in global debt markets. On the economic front, data showed on Thursday that Japan’s April exports rose at a faster-than-expected pace, as a weaker yen and resilient global demand helped counter the negative impact of the Middle East conflict. Separately, a survey showed that Japan’s manufacturing activity eased slightly in May, while service sector growth stalled for the first time in more than a year, as soaring costs tied to the Middle East conflict weighed on confidence. In other news, foreign investors bought a net 949.6 billion yen worth of Japanese stocks in the week to May 16th, extending their buying streak to a seventh consecutive week, according to Japan’s Ministry of Finance data. Investor focus is now squarely on Japan’s National Core CPI for April, scheduled for release on Friday. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -6.61% to 27.98.

The Japanese April Trade Balance stood at 301.9 billion yen, stronger than expectations of -29.7 billion yen.

The Japanese April Exports rose +14.8% y/y, stronger than expectations of +9.3% y/y.

The Japanese April Imports rose +9.7% y/y, stronger than expectations of +8.3% y/y.

The Japanese March Core Machinery Orders fell -9.4% m/m and rose +5.9% y/y, compared to expectations of -7.7% m/m and +4.5% y/y.

The Japanese May S&P Global Manufacturing PMI (preliminary) stood at 54.5, in line with expectations.

Pre-Market U.S. Stock Movers

Nvidia (NVDA) rose about +0.1% in pre-market trading after the chipmaker posted upbeat Q1 results and issued strong Q2 revenue guidance.

Intuit (INTU) plunged more than -14% in pre-market trading after the financial software developer said it would cut its full-time workforce by 17%.

Travel stocks fell in pre-market trading as oil prices rose, with Carnival (CCL) and United Airlines Holdings (UAL) dropping more than -2%.

Applied Digital (APLD) climbed over +8% in pre-market trading after the data center company said it had signed a long-term agreement worth about $7.5 billion with a U.S.-based hyperscaler.

e.l.f. Beauty (ELF) rose more than +7% in pre-market trading after the cosmetics and skin care company posted stronger-than-expected FQ4 results.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - May 21st

Walmart (WMT), Deere & Company (DE), Ross Stores (ROST), Take-Two Interactive Software (TTWO), Copart (CPRT), Workday (WDAY), Zoom Communications (ZM), Williams-Sonoma (WSM), Ralph Lauren (RL), Deckers Outdoor (DECK), BJ's Wholesale Club Holdings (BJ), Advanced Drainage Systems (WMS), Hamilton Lane (HLNE), Webull (BULL), Cavco Industries (CVCO), Lionsgate Studios (LION), Advance Auto Parts (AAP), Flowers Foods (FLO), Hovnanian Enterprises (HOV), Shoe Carnival (SCVL).