S&P Futures Gain as Bond Yields Fall, U.S.-Iran Updates Awaited

June S&P 500 E-Mini futures (ESM26) are trending up +0.15% this morning as Treasury yields fell, putting the benchmark index on course for its eighth consecutive weekly gain.

Treasuries extended their rebound on Friday, with the 10-year yield falling one basis point to 4.56%. Analysts noted that U.S. authorities remain highly focused on borrowing costs and that current levels will strengthen the White House’s determination to find a resolution in the Middle East.

However, gains in S&P 500 futures were limited as oil prices advanced, with investors awaiting more clarity over the Middle East conflict. U.S. Secretary of State Marco Rubio said on Thursday there had been “some good signs” that the U.S. could reach a peace deal with Iran. Still, disagreements remain over Tehran’s uranium stockpile and controls over the Strait of Hormuz. Iranian media reported on Friday that Iran’s foreign minister met with his Pakistani counterpart to discuss proposals to end the nearly three-month-old war.

In yesterday’s trading session, Wall Street’s major indices closed higher. Ralph Lauren (RL) jumped over +13% and was the top percentage gainer on the S&P 500 after the luxury retailer posted stronger-than-expected FQ4 results and issued solid FY27 revenue growth guidance. Also, AI infrastructure stocks rallied, with Arm Holdings (ARM) surging more than +16% to lead gainers in the Nasdaq 100 and Sandisk (SNDK) climbing over +10%. In addition, quantum computing stocks spiked after the U.S. Commerce Department confirmed it plans to award funding to nearly a dozen companies to support the development of the domestic quantum industry, with D-Wave Quantum (QBTS) soaring more than +33% and Rigetti Computing (RGTI) jumping over +30%. On the bearish side, Intuit (INTU) plummeted more than -20% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the financial software developer reported weaker-than-expected FQ3 product and other revenue and said it would cut its full-time workforce by 17%.

“We continue to think this bull market — and the AI trade — has more to go, even though it could take a breather now that earnings season is over and attention may shift back to the still unresolved situation in the Middle East,” according to UBS Global Wealth Management’s strategists.

Economic data released on Thursday indicated stability in the labor market and resilience in manufacturing and housing activity. The U.S. S&P Global manufacturing PMI unexpectedly rose to 55.3 in May, stronger than expectations of 53.8, while the S&P Global services PMI dipped to 50.9, weaker than expectations of 51.1. Also, the number of Americans filing for initial jobless claims in the past week fell by -3K to 209K, compared with the 210K expected. In addition, U.S. April housing starts fell -2.8% m/m to 1.465 million, a smaller decline than expectations of 1.420 million, while building permits, a proxy for future construction, rose +5.8% m/m to 1.442 million, stronger than expectations of 1.380 million. At the same time, the U.S. Philly Fed manufacturing index fell to a 5-month low of -0.4 in May, weaker than expectations of 17.6.

Richmond Fed President Tom Barkin said on Thursday the ability of businesses and consumers to absorb the latest in a string of supply shocks will determine whether the U.S. central bank can continue to “look through” elevated inflation without raising interest rates. For now, Barkin said the Fed’s monetary policy stance is “well positioned” to manage risks to both the labor market and inflation. Separately, Chicago Fed President Austan Goolsbee said he believes the U.S. inflation problem is deteriorating, in contrast to the stability he sees in the labor market.

U.S. rate futures have priced in a 99.3% probability of no rate change and a 0.7% chance of a 25 basis point rate hike at the next FOMC meeting in June.

Meanwhile, Kevin Warsh is set to be sworn in as Federal Reserve chair by President Trump later today during a ceremony at the White House.

Elsewhere, UBS Global Wealth Management raised its 2026 year-end forecast for the S&P 500 index to 7,900 from 7,500 on Friday, citing resilient consumer spending and robust demand for data center infrastructure.

Today, investors will focus on the University of Michigan’s U.S. Consumer Sentiment Index, which is set to be released in a couple of hours. Economists anticipate that the final May figure will remain unrevised at 48.2.

The Conference Board’s Leading Economic Index for the U.S. will also be released today. Economists expect the April figure to drop -0.1% m/m, compared to the previous number of -0.6% m/m.

In addition, market participants will be anticipating a speech from Fed Governor Christopher Waller.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.56%, down -0.24%.

The Euro Stoxx 50 Index is up +0.40% this morning, buoyed by strong momentum in the tech sector, while investors await more clarity on the Middle East conflict. U.S. Secretary of State Marco Rubio said there had been “some good signs” that the U.S. could reach a peace deal with Iran. However, disagreements remain over Tehran’s uranium stockpile and controls over the Strait of Hormuz, clouding the prospects for a breakthrough in negotiations. Technology stocks outperformed on Friday amid unrelenting enthusiasm for AI. The benchmark index is on track to post a strong weekly gain. A survey released on Friday showed that German business sentiment edged higher in May, but it remains near multiyear lows, as companies adjusted to the energy shock triggered by the closure of the Strait of Hormuz. A separate survey found that German consumer sentiment is set to improve slightly heading into June amid a recovery in income expectations, though the impact of the Iran war is still being felt. In addition, data showed that U.K. monthly retail sales fell much more than expected in April, adding to signs of weakening consumer spending amid the Iran war and rising energy costs. Meanwhile, Europe’s economy commissioner, Valdis Dombrovskis, became the latest official to say the European Central Bank would have to respond to rising inflation. ECB President Christine Lagarde is set to speak later today. Money markets are currently pricing in at least two ECB rate hikes before year-end. In corporate news, Puig Brands SA (PUIG.E.DX) plunged over -13% after the termination of talks with U.S. cosmetics maker Estee Lauder over a potential merger.

Germany’s GDP, Germany’s GfK Consumer Climate Index, Germany’s Ifo Business Climate Index, U.K. Retail Sales, and U.K. Core Retail Sales data were released today.

The German GDP has been reported at +0.3% q/q and +0.4% y/y in the first quarter, compared to expectations of +0.3% q/q and +0.3% y/y.

The German June GfK Consumer Climate Index came in at -29.8, stronger than expectations of -33.7.

The German May Ifo Business Climate Index stood at 84.9, stronger than expectations of 84.2.

U.K. April Retail Sales fell -1.3% m/m and were unchanged y/y, weaker than expectations of -0.6% m/m and +1.3% y/y.

U.K. April Core Retail Sales fell -0.4% m/m and rose +1.1% y/y, weaker than expectations of -0.3% m/m and +1.5% y/y.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.87%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +2.68%.

China’s Shanghai Composite Index closed higher today, bouncing back after posting its largest daily percentage drop since March in the previous session. Investors kept a close eye on developments in U.S.-Iran talks. U.S. Secretary of State Marco Rubio said there had been “some good signs” in talks to end the war, but disagreements remain over Tehran’s uranium stockpile and controls over the Strait of Hormuz. Technology stocks advanced on Friday, following a steep decline in the previous session. However, the benchmark index notched its second straight weekly loss. Meanwhile, Bloomberg News reported on Friday that Chinese regulators were examining recent stock rallies driven by AI optimism, asking some listed companies and funds to provide more details about their approach to the technology. The move highlights Beijing’s unease with some of the wild stock swings that have accompanied the AI boom. Earlier this week, Economic Information Daily, administered by the official Xinhua News Agency, warned of “hidden risks” tied to AI investment, citing the mismatch between lofty valuations and uncertain fundamentals. In corporate news, Lenovo Group jumped over +19% in Hong Kong after the company reported stronger-than-expected FQ4 revenue, fueled by robust demand for AI-enabled devices and AI infrastructure, and said it aims to reach the $100 billion sales milestone within the next two years.

Japan’s Nikkei 225 Stock Index closed sharply higher today, extending gains from the previous session amid renewed enthusiasm for the AI trade. Technology stocks led the gains on Friday. SoftBank Group jumped about +11%, following gains in U.S.-listed shares of its chipmaking unit Arm Holdings. The technology investment company provided the biggest boost to the Nikkei, accounting for 578 of the index’s total 1,655-point advance. Chip equipment maker Tokyo Electron was another strong contributor, rising over +2%. The benchmark index posted a solid weekly gain. Government data released on Friday showed that Japan’s annual core inflation eased to a 4-year low in April, though that is unlikely to dampen rate-hike expectations as Bank of Japan officials grow increasingly concerned about price pressures stemming from the Middle East conflict. “Although inflationary pressures eased in April, they will pick up again before long. Accordingly, we still think the Bank of Japan is likely to resume its tightening cycle sooner rather than later,” said Abhijit Surya at Capital Economics. Meanwhile, Japanese government bonds rose on Friday on optimism over a near-term resolution to the Iran war. Japanese Finance Minister Satsuki Katayama also sought to calm investors by saying the government would try to avoid excessive reliance on new debt issuance if it decides to compile an extra budget. In corporate news, Kawasaki Heavy Industries climbed over +4% on the company’s plan to partner with Nvidia and others on physical AI robot technology. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +1.32% to 28.35.

The Japanese April National Core CPI rose +1.4% y/y, weaker than expectations of +1.7% y/y.

Pre-Market U.S. Stock Movers

Workday (WDAY) surged over +10% in pre-market trading after the software company posted stronger-than-expected Q1 results.

Estee Lauder (EL) climbed more than +9% in pre-market trading after the cosmetics company terminated its acquisition talks with Spain’s Puig Brands.

Zoom Communications (ZM) rose over +6% in pre-market trading after the company posted better-than-expected Q1 results and boosted its annual guidance.

Ross Stores (ROST) advanced over +5% in pre-market trading after the discount apparel and home accessories retailer reported upbeat Q1 results and raised its full-year guidance.

Texas Instruments (TXN) gained about +1% in pre-market trading after Seaport Research upgraded the stock to Buy from Neutral with a $400 price target.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - May 22nd

BJ’s Wholesale Club Holdings (BJ), Booz Allen Hamilton Holding (BAH), ePlus Inc. (PLUS), NervGen Pharma (NGEN), Eagle Nuclear Energy (NUCL).