Stocks Retreat as US-Iran Standoff Boosts Crude Oil and Bond Yields

The S&P 500 Index ($SPX) (SPY) today is down -0.35%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.11%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.51%.  June E-mini S&P futures (ESM26) are down -0.40%, and June E-mini Nasdaq futures (NQM26) are down -0.59%.

Stock indexes are under pressure today as the standoff between the US and Iran boosted crude oil prices and bond yields on concern that a prolonged closure of the Strait of Hormuz could worsen energy disruptions and fuel inflation.  Crude prices jumped more than +2% after Reuters reported that Iran's Supreme Leader said enriched uranium must stay in Iran, as sending the material abroad would leave the country more vulnerable to future attacks by the US and Israel.  The report tempers optimism that the US and Iran were moving closer to a deal to end the war.  The markets are awaiting Iran’s official response to the latest US proposals to reopen the Strait.  The 10-year T-note yield is up +4 bp to 4.61%. 

Nvidia’s earnings results, released after Wednesday’s close, were better-than-expected, although some analysts questioned the sustainability of growth, especially amid higher competition.  Nvidia is trading down more than -1%. 

Stock indexes found support on today’s economic news, which showed signs of stability in the labor market and strength in manufacturing and housing activity.  On the negative side, the May Philadelphia Fed business outlook survey fell more than expected to a 5-month low.

US weekly initial unemployment claims fell -3,000 to 209,000, close to expectations of 210,000.

US Apr housing starts fell -2.8% m/m to 1.465 million, a smaller decline than expectations of 1.410 million.  Apr building permits, a proxy for future construction, rose +5.8% m/m to 1.442 million, stronger than expectations of 1.384 million.

The US May Philadelphia Fed business outlook survey fell -27.1 to a 5-month low of -0.4, weaker than expectations of 17.8.

The US May S&P manufacturing PMI unexpectedly rose +0.8 to 55.3, stronger than expectations of a decline to 53.8 and the strongest pace of expansion in 4 years.

WTI crude oil prices (CLM26) remain extremely volatile and are susceptible to headlines from the Iran war.  Prices jumped more than +2% today on a report that Iran’s Supreme Leader has issued a directive that the country’s enriched uranium should not be sent abroad.  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 3% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.

Earnings season is winding down, and reports thus far have been supportive of stocks.  As of today, 83% of the 466 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 fell from a 2-week high and is down -0.02%. China's Shanghai Composite fell to a 3-week low and closed down -2.04%.  Japan's Nikkei Stock Average closed up sharply by +3.14%.

Interest Rates

June 10-year T-notes (ZNM6) today are down -10 ticks.  The 10-year T-note yield is up +3.0 bp to 4.615%.  T-note prices are under pressure today amid a +2% jump in WTI crude oil prices, which has raised inflation expectations.  Also, today’s stronger-than-expected reports on housing starts, building permits, and manufacturing activity were bearish for T-notes.  Losses in T-notes are limited after the May Philadelphia Fed business outlook survey fell more than expected to a 5-month low.

European government bond yields are mixed today.  The 10-year German Bund yield is up +0.1 bp to 3.097%. The 10-year UK gilt yield fell to a 1.5-week low of 4.940% and is down -3.7 bp to 4.951%.

The Eurozone May S&P manufacturing PMI fell -0.8 to 51.4, weaker than expectations of 51.8.  The Eurozone May S&P composite PMI fell -1.3 to 47.5, weaker than expectations of no change at 48.8 and the steepest pace of contraction in 2.5 years.

The Eurozone May consumer confidence index rose +1.6 to -19.0, stronger than expectations of no change at -20.6.

The European Commission forecast that 2026 Eurozone GDP will weaken to +0.9% from +1.4% in 2025, while 2026 Eurozone CPI will strengthen to +3.0% from +2.1% in 2025.

The UK May S&P manufacturing PMI was unchanged at 53.7, stronger than expectations of a decline to 53.0.

Swaps are discounting an 88% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Intuit (INTU) is down more than -19% to lead losers in the S&P 500 and Nasdaq 100, and software stocks are lower after reporting Q3 product and other revenue of $799 million, well below the consensus of $920.5 million.  Also, Atlassian Corp (TEAM), Adobe Systems (ADBE), and Workday (WDAY) are down more than -3%, and ServiceNow (NOW) and Salesforce (CRM) are down more than -2%.  In addition, Autodesk (ADSK) is down more than -1%, and Microsoft (MSFT) is down -0.90%. 

Chipmakers are sliding today and weighing on the broader market.  Intel (INTC), Microchip Technology (MCHP), and Analog Devices (ADI) are down more than -3%, and Advanced Micro Devices (AMD), NXP Semiconductors NV (NXPI), and Texas Instruments (TXN) are down more than -2%.  Also, Nvidia (NVDA) is down more than -1%.

AI-infrastructure stocks are climbing today.  ARM Holdings Plc (ARM) is up more than +9% to lead gainers in the Nasdaq 100, and Seagate Technology Holdings Plc (STX) is up more than +7%.  Also, Sandisk (SNDK) is up more than +5%, and Western Digital (WDC) is up more than +4%.  In addition, Lam Research (LRCX), Micron Technology (MU), and Marvell Technology (MRVL) are up more than +2%, and Qualcomm (QCOM) is up more than +1%. 

Walmart (WMT) is down more than -7% to lead losers in the Dow Jones Industrials after forecasting Q2 adjusted EPS of 72 cents to 74 cents, weaker than the consensus of 75 cents. 

Deere & Co (DE) is down more than -6% after forecasting full-year net income of $4.5 billion to $5.0 billion, the midpoint below the consensus of $4.79 billion. 

Kroger (KR) is down more than 2% after CEO Foran said the company is considering significant price cuts to win back market share. 

Rigetti Computing (RGTI) is up more than +24% after signing a letter of intent with the US Department of Commerce for an award of up to $100 million in funding over three years to accelerate superconducting quantum computing research and development. 

Applied Digital (APLD) is up more than +17% after signing a 15-year lease valued at about $7.5 billion with a US investment-grade hyperscaler for its Polaris Forge 3 campus.

Nebius Group NV (NBIS) is up more than +16% after partnering with Bloom Energy to deploy fuel-cell technology to power its AI-infrastructure build-out in the US.

Ralph Lauren (RL) is up more than +10% to lead gainers in the S&P 500 after reporting Q4 net revenue of $2.0 billion, above the consensus of $1.85 billion.

EnerSys (ENS) is up more than +9% after reporting Q4 net sales of $988 million, better than the consensus of $974 million. 

International Business Machines (IBM) is up more than +7% to lead gainers in the Dow Jones Industrials after the Wall Street Journal reported the company is receiving a $1 billion grant from the US government for a stake in its quantum-computing business. 

Elf Beauty (ELF) is up more than +1% after reporting Q4 net sales of $449.3 million, stronger than the consensus of $423.1 million. 

Earnings Reports(5/21/2026)

Advanced Drainage Systems Inc (WMS), Copart Inc (CPRT), Deckers Outdoor Corp (DECK), Deere & Co (DE), Flowers Foods Inc (FLO), Hamilton Lane Inc (HLNE), Ralph Lauren Corp (RL), Ross Stores Inc (ROST), Take-Two Interactive Software (TTWO), Walmart Inc (WMT), Williams-Sonoma Inc (WSM), Workday Inc (WDAY), Zoom Communications Inc (ZM).