Broader Market Weakens as Energy and Software Stocks Fall

The S&P 500 Index ($SPX) (SPY) today is down -0.18%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.69%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.83%.  June E-mini S&P futures (ESM26) are down -0.20%, and June E-mini Nasdaq futures (NQM26) are down -0.85%. 

Stock indexes are mixed today, with the Dow Jones Industrials posting a new all-time high.  The weakness in energy producers from the plunge in crude oil prices is weighing on the broader market.  Also, weakness in software stocks is a drag on the overall market.  In addition, today’s weaker-than-expected US housing starts and building permits reports are negative for stocks.

Stocks are supported as crude oil prices dropped another -3% today to a 3.25-month low, easing inflation expectations and supporting stocks and bonds.  Stocks have carryover support from Monday’s surge after the US and Iran agreed to end their war and reopen the Strait of Hormuz, stoking risk-on sentiment in asset markets.  The 10-year T-note yield is down -2 bp to 4.45%.

The market’s focus will turn to the 2-day FOMC meeting that begins today, the first under the leadership of new Fed Chair Kevin Warsh. While the Fed is expected to keep interest rates unchanged, the spotlight will be on how Mr. Warsh navigates the post-meeting press conference and the outlook for inflation.

US May housing starts fell -15.4% m/m to a 6-year low of 1.177 million, weaker than expectations of 1.430 million.  May building permits, a proxy for future construction, fell -0.7% m/m to 1.413 million, weaker than expectations of 1.418 million.

The US May import price index ex-petroleum rose +0.8% m/m, stronger than expectations of +0.5% m/m.

WTI crude oil prices (CLN26) are down more than -3% today at a 3.25-month low due to the US-Iran deal to reopen the Strait of Hormuz, boosting expectations for a revival in oil supplies. Goldman Sachs today cut its price forecast on Brent crude to $80 a barrel in Q4 of this year, down from $90 a barrel, and said it expects Persian Gulf crude exports to return to pre-war levels by the end of July, one month earlier than previously expected. 

The markets are discounting a 4% chance of a +25 bp rate hike at the conclusion of the Tue/Wed FOMC meeting.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is up +0.56%.  China's Shanghai Composite fell from a 1.5-week high and closed down -0.11%.  Japan’s Nikkei-225 Stock Average rose to a new all-time high and closed up +0.13%.

Interest Rates

September 10-year T-notes (ZNU6) today are up +4.5 ticks, and the 10-year T-note yield is down -2.6 bp to 4.447%.  Sep T-notes are moving higher today amid the fall in WTI crude oil to a 3.25-month low, which has reduced inflation expectations and is bullish for T-notes.  Also, weaker-than-expected US May housing starts and building permits are supportive of T-notes.  In addition, markets are hoping for a less hawkish FOMC meeting this week, given that oil prices should decline over time if the Strait of Hormuz reopens as expected. 

European government bond yields are moving lower today.  The 10-year German bund yield fell to an 8-week low of 2.920% and is down -1.6 bp to 2.938%.  The 10-year UK gilt yield is down -0.8 bp to 4.804%.

Eurozone Q1 labor costs were revised downward to +3.2% y/y from the previously reported +3.4% y/y.

The German Jun ZEW survey expectations of economic growth rose +20.7 to a 4-month high of 10.5, stronger than expectations of -5.5.

Swaps are discounting a 17% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.

US Stock Movers

Software stocks are falling today, a negative factor for the overall market.  Atlassian Corp (TEAM) and Palantir Technologies (PLTR) are down more than -3%, and ServiceNow (NOW) and Workday (WDAY) are down more than -2%.  Also, Microsoft (MSFT), Salesforce (CRM), and Oracle (ORCL) are down more than -1%.  In addition, Intuit (INTU) is down -0.90% and Datadog (DDOG) is down -0.50%.

Cybersecurity stocks are under pressure today, weighing on the broader market.  Zscaler (ZS) is down more than -3%, and Okta (OKTA) and Fortinet (FTNT) are down more than -2%.  Also, CrowdStrike Holdings (CRWD), Palo Alto Networks (PANW), and Cloudflare (NET) are down more than -1%. 

Energy stocks and service providers are moving lower today with WTI crude oil down more than -3% to a 3.25-month low.  APA Corp (APA) and Valero Energy (VLO) are down more than -2%.  Also, Baker Hughes (BKR), ConocoPhillips (COP), Diamondback Energy (FANG), Devon Energy (DVN), Haliburton (HAL), and Occidental Petroleum (OXY) are down more than -1%. 

Airline stocks and cruise line operators are rallying today as the -3% decline in WTI crude oil prices lowers fuel costs and boosts the profitability prospects for the companies. American Airlines Group (AAL) and Southwest Airlines (LUV) are up more than +4%, and Norwegian Cruise Line Holdings (NCLH) is up more than +2%.  Also, Carnival (CCL), Alaska Air Group (ALK), and Royal Caribbean Cruises (RCL) are up more than +1%. 

Mining stocks are climbing today with rallies in gold, silver, and copper prices.  Newmont Corp (NEM), Coeur Mining (CDE), and Barrick Mining (B) are up more than +2%, and Anglogold Ashanti (AU) is up more than +1%.  Also, Hecla Mining (HL) is up +0.54%, and Freeport McMoRan (FCX) is up 0.19%. 

Space Exploration Technologies (SPCX) is up more than +7%, adding to the +37% gain over the past two sessions on positive carryover from its record $75 billion initial public offering (IPO) late last week, which was more than four times oversubscribed, indicating strong demand for the stock. 

Valmont Industries (VMI) is up more than +5% after projecting a goal of $5.4 billion in organic net sales and an EPS target of $35 by the end of 2029. 

Mobileye Global (MBLY) is up by more than +3% after announcing plans to expand its robotaxi activities beyond self-driving technology into full ownership of an autonomous ride-hailing business. 

Edwards Lifesciences (EW) is up more than +3% after the US government published a coverage proposal for transcatheter aortic valve replacement, a positive development for the company.   

Huntsman (HUN) is down more than -20% after agreeing to merge with Olin in an all-stock merger of equals.

Huson Pacific Properties (HPP) is down more than -4% after Bank of America Global Research downgraded the stock to underperform from neutral with a price target of $14.

Dave & Buster’s Entertainment (PLAY) is down more than -2% after reporting Q1 revenue of $559.2 million, weaker than the consensus of $580.3 million.

Tractor Supply Co (TSCO) is down more than -2% to lead losers in the S&P 500 after several analysts cut their price targets on the stock. 

Earnings Reports(6/16/2026)

John Wiley & Sons Inc (WLY) and La-Z-Boy Inc (LZB).