Stocks Pressured as Oil Prices Climb on US-Iran Clashes

The S&P 500 Index ($SPX) (SPY) today is down -0.14%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.27%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.34%.  June E-mini S&P futures (ESM26) are down -0.17%, and June E-mini Nasdaq futures (NQM26) are down -0.38%.

Stock indexes are under pressure today after fresh US attacks on Iran boosted crude oil prices and fueled doubt over whether an end to the war is imminent.  The US struck Iranian military targets for the second time this week, and Kuwait said it responded to Iranian missile and drone threats.  Crude oil prices jumped more than +2% on the news.   

However, stock index futures bounced off their lows amid Fed-friendly US economic news.  The Apr core PCE price index, the Fed's preferred inflation gauge, rose as expected. Also, April capital goods new orders unexpectedly declined, weekly jobless claims rose more than expected, and Q1 GDP was revised downward.  The 10-year T-note yield gave up an early advance and is down -2 bp to 4.46%. 

US weekly initial unemployment claims rose by +5,000 to 215,000, showing a weaker labor market than expectations of 211,000.

US Apr personal spending rose +0.5% m/m, right on expectations. Apr personal income was unchanged m/m, weaker than expectations of +0.4% m/m.

The US Apr core PCE price index, the Fed's preferred inflation gauge, rose +3.3% y/y, right on expectations and the largest increase in 2.5 years.

US Apr capital goods new orders nondefense ex-aircraft and parts unexpectedly fell -1.1% m/m versus expectations of a +0.4% m/m increase and the biggest decline in a year.

US Q1 GDP was revised downward to +1.6% (q/q annualized), weaker than expectations of no change at +2.0%.  Q1 personal consumption was revised lower to +1.4% from the previously reported +1.6%, and the Q1 core PCE price index was revised upward to a 3-year high of +4.4% from the previously reported +4.3%.

Hawkish Fed comments are also weighing on stocks and bonds.  Fed Governor Lisa Cook said inflation is headed in the wrong direction and she would be prepared to raise interest rates if that persists.  Also, Minneapolis Fed President Neel Kashkari said US consumer prices are still "much too high" and that bringing down inflation remains his top priority.

Crude oil prices are up more than +2% today after US forces shot down four Iranian drones fired at a commercial ship and hit a launch site near the Strait of Hormuz.  Also, the US Treasury added Iran's Persian Gulf Strait Authority to its Iran-related sanctions list to prevent Iran from profiting from vessels transiting the Strait of Hormuz by charging tolls.  In addition, Israel stepped up attacks on Lebanon and said its ground forces would move further into the country, potentially complicating US-Iran talks on an interim peace deal. 

The markets are discounting a 3% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.

The generally favorable Q1 earnings season is winding down.  As of today, 83% of the 479 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 down -0.46%.  China's Shanghai Composite recovered from a 5-week low and closed up +0.12%.  Japan's Nikkei Stock Average closed down -0.47%.

Interest Rates

June 10-year T-notes (ZNM6) today are up +4 ticks.  The 10-year T-note yield is down -1.4 bp to 4.469%.  T-note prices recovered from early losses and moved higher on Fed-friendly economic news. Weekly jobless claims rose more than expected, Apr core capital goods orders unexpectedly declined, Q1 GDP was revised lower, and the Apr core PCE price index, the Fed's preferred inflation gauge, rose as expected. 

T-notes initially moved lower today from a +2% jump in WTI crude oil prices, which raised inflation expectations.  Also, hawkish comments from Fed Governor Lisa Cook and Minneapolis Fed President Neel Kashkari undercut T-note prices, as they expressed concern about persistently high inflation.  In addition, supply pressures are negative for T-notes as the Treasury will auction $44 billion of 7-year T-notes later today. 

European government bond yields are moving lower today.  The 10-year German Bund yield is down -0.1 bp to 2.986%.  The 10-year UK gilt yield is down -1.5 bp to 4.843%.

The Eurozone May economic sentiment indicator rose +0.3 to 93.5, stronger than expectations of no change at 93.0.

ECB Chief Economist Philip Lane said the impact of the Iran war will take longer to show in the labor market, and the "second round" of the energy shock on the Eurozone will persist for a while.

Swaps are discounting a 92% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Mining stocks are faltering today with gold prices dropping to a 2-month low and silver prices falling to a 4-week low.  Newmont Corp (NEM), Hecla Mining (HL), and Coeur Mining (CDE) are down more than -3%, and Anglogold Ashanti (AU) is down more than -2%.  Also, Freeport McMoRan (FCX) and Barrick Mining (B) are down more than -1%.

Cryptocurrency-related stocks are falling today, with Bitcoin (^BTCUSD) down more than -3% to a 6-week low.  Strategy (MSTR) is down more than -6% to lead losers in the Nasdaq 100, and MARA Holdings (MARA) and Galaxy Digital Holdings (GLXY) are down more than -4%.  Also, Coinbase Global (COIN) is down more than -1%. 

Drone-related stocks are rallying today after the Wall Street Journal reported the Trump administration is exploring funding deals with a group of drone companies.  Unusual Machines (UMAC) is up more than +47%, and Red Cat (RCAT) is up more than +22%.  Also, AIRO Group Holdings (AIRO) is up more than +13%, and AeroVironment (AVAV) and Kratos Defense & Security Solutions (KTOS) are up more than +11%.

Photronics (PLAB) is down more than -31% after forecasting Q3 adjusted EPS of 39 cents to 45 cents, weaker than the consensus of 54 cents. 

Symbotic (SYM) is down more than -9% after Softbank Group is said to sell 5.6 million shares of its holdings of SYM in an unregistered block trade between $51 and $53.63 a share. 

HP Inc. (HPQ) is down more than -2% after lowering the upper end of its full-year EPS estimate to $2.90-$3.10 from a previous view of $2.90-$3.20, citing rising memory and storage costs.

Snowflake (SNOW) is up more than +33% after reporting Q1 revenue of $1.39 billion, better than the consensus of $1.33 billion and raising its 2027 product revenue forecast to $5.84 billion from a previous estimate of $5.66 billion, well above the consensus of $5.68 billion. 

Dollar Tree (DLTR) is up more than +16% to lead gainers in the S&P 500 after reporting Q1 adjusted EPS of $1.74, stronger than the consensus of $1.55, and raising its 2027 adjusted EPS estimate to $6.70 to $7.10 from a previous estimate of $6.50 to $6.90, above the consensus of $6.69. 

Agilent (A) is up more than +15% after raising its full-year revenue forecast to $7.39 billion-$7.49 billion from a previous estimate of $7.3 billion-$7.5 billion yuan, above the consensus of $7.39 billion.

Best Buy (BBY) is up more than +13% after forecasting Q2 comparable sales up +1.00%, stronger than the consensus of down -0.32%.

Heico (HEI) is up more than +12% after reporting Q2 net sales of $1.38 billion, well above the consensus of $1.25 billion.

Caesars Entertainment (CZR) is up more than +1% after Fertitta Entertainment agreed to acquire the company for $17.6 billion, or $31 a share. 

Earnings Reports(5/28/2026)

Autodesk Inc (ADSK), Best Buy Co Inc (BBY), Burlington Stores Inc (BURL), Costco Wholesale Corp (COST), Dell Technologies Inc (DELL), Dollar Tree Inc (DLTR), Elastic NV (ESTC), Gap Inc/The (GAP), Hormel Foods Corp (HRL), MongoDB Inc (MDB), NetApp Inc (NTAP), Okta Inc (OKTA), SentinelOne Inc (S), UiPath Inc (PATH).