Stocks Rally as Falling Crude Prices Knock Bond Yields Lower

The S&P 500 Index ($SPX) (SPY) today is up +0.72%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.82%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.50%.  September E-mini S&P futures (ESU26) are up +0.56%, and September E-mini Nasdaq futures (NQU26) are up +0.33%. 

Stock indexes are climbing today, as the market recovers some of Tuesday’s sharp selloff, with investors looking ahead to Micron Technology’s earnings results after today’s close to gauge whether artificial intelligence is living up to expectations.  Micron Technology is one of the biggest beneficiaries of the soaring demand, as companies stand to gain from the billions of dollars being pumped into AI infrastructure, with the stock up more than 260% this year.   

Evidence of the vast amounts of capital flowing into the buildout of AI infrastructure and its supply chain is supporting stock prices. South Korea’s Kospi Stock Index closed up more than +3% today after SK Hynix announced it was looking to raise 45.45 trillion won ($29 billion) in a US listing and intends to use the proceeds for building additional chip-making capacity.

Homebuilders and building suppliers are climbing today after Congress passed the 21st Century Road to Housing Act.  Also, airlines and cruise line operators are moving higher, with today’s fall in crude oil prices to a 3.5-month low.  On the negative side, today’s US economic news showed that May new home sales unexpectedly fell to a 4-month low. Also, mining stocks are retreating today as gold, silver, and copper prices plunge to multi-month lows, and energy producers are sliding as crude oil prices tumbled to a 3.5-month low.

WTI crude extended recent declines today, which lowers inflation expectations and bond yields and is bullish for stocks.  Crude prices (CLQ26) are down more than -4% at a 3.5-month low today as more tankers openly cross the Strait of Hormuz, boosting global crude supplies.  Vessels are transiting the waterway with their satellite signals switched on, indicating growing confidence among shipowners.  Also, the International Maritime Organization said it had received guarantees allowing hundreds of ships to exit the Persian Gulf. The slump in crude oil prices has knocked the 10-year T-note yield down by -8 bp today to a 6-week low of 4.41%, a positive factor for stocks.

US MBA mortgage applications rose +1.0% in the week ended June 19, with the purchase mortgage sub-index down -0.6% and the refinancing mortgage sub-index up +3.0%.  The average 30-year fixed rate mortgage fell -1 bp to 6.59% from 6.60% in the prior week.

The US Q1 current account deficit was -$225.8 billion, larger than the -$208.9 billion expected.

US May new home sales unexpectedly fell -7.3% m/m to a 4-month low of 580,000, weaker than expectations of an increase to 640,000.

The markets are discounting a 32% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.

Overseas stock markets are mixed today.  The Euro Stoxx 50 slipped to a 1.5-week low and is down -0.39%.  China's Shanghai Composite closed up +0.11%.  Japan’s Nikkei-225 Stock Average fell to a 1-week low and closed down -0.88%.

Interest Rates

September 10-year T-notes (ZNU6) today are up +17 ticks, and the 10-year T-note yield is down -9.0 bp to 4.060%.  T-notes are moving higher today, with the 10-year T-note yield falling to a 6-week low of 4.406%.  Today’s -4% plunge in WTI crude oil to a 3.5-month low has lowered inflation expectations, a supportive factor for T-note prices.  The 10-year breakeven inflation rate fell to a 14-month low of 2.176% today.  Gains in T-notes accelerated today after US May new home sales unexpectedly fell to a 4-month low.  Supply pressures are limiting gains in T-notes, as the Treasury will auction $28 billion of 2-year floating-rate notes and $70 billion of 5-year T-notes later today. 

European government bond yields are moving lower today.  The 10-year German bund yield fell to a 3.5-month low of 2.862% and is down -5.7 bp to 2.863%.  The 10-year UK gilt yield dropped to a 3-month low of 4.673% and is down -7.8 bp to 4.676%.

The German Jun IFO business confidence index rose +0.6 to 85.6, stronger than expectations of 85.5.

Swaps are discounting a 7% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.

US Stock Movers

Homebuilders and building suppliers are climbing today after Congress passed the 21st Century Road to Housing Act.  KB Home (KBH) is up more than +16%, and Builders Firstsource (BLDR) is up more than +11% to lead gainers in the S&P 500.  Also, Lennar (LEN), DR Horton (DHI), Pulte Group (PHM), and Toll Brothers (TOL) are up more than +7%.  In addition, Home Depot (HD) is up more than +4% to lead gainers in the Dow Jones industrials.

Airline stocks and cruise line operators are moving higher as today’s -4% plunge in crude oil to a 3.5-month low reduces fuel costs and boosts the companies’ profitability prospects. Alaska Air Group (ALK) is up more than +7%, and United Airlines Holdings (UAL) and American Airlines Group (AAL) are up more than +6%.  Also, Royal Caribbean Cruises (RCL) is up more than +5%, and Delta Air Lines (DAL) is up more than +4%.  In addition, Carnival (CCL), Norwegian Cruise Line Holdings (NCLH), and Southwest Airlines (LUV) are up more than +3%.

Travel stocks are soaring today as crude oil prices plunge to a 3.5-month low, lowering fuel costs and boosting travel prospects.  MakeMyTrip Ltd (MMYT) is up more than +10%, and Expedia Group (EXPE) is up more than +9%.  Also, Booking Holdings (BKNG) is up more than +8%, and Airbnb (ABNB) and TripAdvisor (TRIP) are up more than +4%.

Mining stocks are falling today, as gold, silver, and copper prices retreat.  Anglogold Ashanti (AU) is down more than -6%, and Barrick Mining (B) and Coeur Mining (CDE) are down more than -4%.  Also, Freeport McMoRan (FCX), Southern Copper (SCCO), Hecla Mining (HL), and Newmont Corp (NEM) are down more than -3%. 

Energy producers and service providers are under pressure today, with WTI crude down more than 4% to a 3.5-month low.  Baker Hughes (BKR) is down more than -5%, and Haliburton (HAL) is down more than -4%.  Also, APA Corp (APA), ConocoPhillips (COP), and SLB Limited (SLB) are down more than -3%, and Devon Energy (DVN), Diamondback Energy (FANG), Exxon Mobil (XOM), and Occidental Petroleum (OXY) are down more than -2%.  In addition, Chevron (CVX) is down more than -2% to lead losers in the Dow Jones industrials. Finally, Marathon Petroleum (MPC), Phillips 66 (PSX), and Valero Energy (VLO) are down more than 1%.

Twilio Inc (TWLO) is up more than +3% after Goldman Sachs initiated coverage on the stock with a buy recommendation and a price target of $300. 

Honeywell Aerospace (HONAV) is up more than +3% after S&P Dow Jones Indices announced that the company will replace Conagra Brands in the S&P 500 before the opening of trading on Tuesday, June 30. 

Terex Corp (TEX) is up more than +3% after D.A. Davidson initiated coverage on the stock with a buy recommendation and a price target of $81. 

FuelCell Energy (FCEL) is up more than +1% after announcing it had reached an agreement with Fit Energy to supply 380 megawatts of clean on-site power for data centers using FuelCell Energy’s technology.   

Cerebras Systems (CBRS) is down by more than -15% after its annual sales forecast missed high investor expectations. 

Flowserve (FLS) is down more than -7% after TD Cowen downgraded the stock to hold from buy with a price target of $70. 

Principal Financial Group (PFG) is down more than -4% after Bank of America Global Research downgraded the stock to underperform from neutral with a price target of $95.

FedEx Corp (FDX) is down more than -1% on disappointment in its first earnings report since completing the spin-off of its freight unit earlier this month. 

Earnings Reports(6/24/2026)

Daktronics Inc (DAKT), HB Fuller Co (FUL), Immersion Corp (IMMR), Jefferies Financial Group Inc (JEF), Methode Electronics Inc (MEI), Micron Technology Inc (MU), Millerknoll Inc (MLKN), Novagold Resources Inc (NG), Paychex Inc (PAYX), Worthington Steel Inc (WS).