Stock Indexes Retreat as Crude Oil and Bond Yields Climb

The S&P 500 Index ($SPX) (SPY) today is down -0.13%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.15%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.48%.  September E-mini S&P futures (ESU26) are down -0.10%, and September E-mini Nasdaq futures (NQU26) are down -0.47%. 

Stock indexes are under pressure today amid weakness in software and cybersecurity stocks.  The markets are waiting for earnings results after the close today from Alphabet to see evidence that the company’s investments in artificial intelligence are generating returns, as it plans to more than double capital spending from 2025 to as much as $190 billion this year. 

Soaring WTI crude oil (CLU26) prices are also pushing bond yields higher and are weighing on stocks.  Crude oil is up more than +2% today to a 6-week high after the US and Iran played down the prospects of peace talks as disruptions to global oil supplies continued to mount.  The 10-year T-note yield climbed to a 2-month high of 4.65% today amid rising crude oil prices.

The US conducted an 11th straight day of attacks on Iran today in an effort to degrade the country's ability to threaten commercial shipping in the Strait of Hormuz.  Iran retaliated by striking US bases in Bahrain, Kuwait, and Jordan.  President Trump said on Tuesday that the US has “no interest” in meeting with Iran until they are ready for serious peace negotiations.

Also, the Joint Maritime Information Center, a monitoring body for naval security, said the Iran-backed Houthi rebels have deployed missiles and drones in preparation for attacks on shipping in the Red Sea.  The Houthis have vowed to blockade shipping linked to Saudi Arabia and warned shipowners against calling at the nation's ports.  The move threatens Saudi oil exports from Yanbu, a Red Sea hub that the Saudi's are using to ship crude since the war brought shipping through the Strait of Hormuz to a near halt.  President Trump said Tuesday that if there is a blockade in the Red Sea, the US “will take care of it.”

US MBA mortgage applications rose +1.9% in the week ended July 17, with the purchase mortgage sub-index up +5.5% and the refinancing mortgage sub-index down -2.4%.  The average 30-year fixed rate mortgage rose +4 bp to an 11-month high of 6.69% from 6.65% in the prior week.

The outlook for strong Q2 earnings, which begin in earnest this week, is a bullish factor for stocks.  Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by +23%, close to Q1’s blowout earnings of +30%, which was more than double the +12% analysts had expected.  AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2.  So far, earnings results have been positive as 91% of the S&P 500 companies that reported Q2 earnings results have beaten estimates, according to data compiled by Bloomberg. 

The markets are discounting a 26% 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 climbed to a 2-week high and is up +0.46%. China's Shanghai Composite closed up +0.07%.  Japan's Nikkei-225 Stock Average closed down -0.18%. 

Interest Rates

September 10-year T-notes (ZNU6) today are down -2 ticks, and the 10-year T-note yield is up +1.2 bp at 4.640%.  Sep T-notes slid to a 1-week low today, and the 10-year T-note yield rose to a 2-month high of 4.650%.   T-notes are sliding today, with WTI crude oil prices up more than +2% to a 6-week high, which raises inflation expectations and is a hawkish factor for Fed policy.  Also, supply pressures are weighing on T-notes as the Treasury will auction $13 billion of 20-year T-bonds later today. 

European government bond yields are moving higher today.  The 10-year German bund yield rose to a 2-month high of 3.192% and is up +1.7 bp to 3.180%.  The 10-year UK gilt yield climbed to a 2-month high of 5.064% and is up +1.3 bp to 5.043%.

UK Jun CPI eased to +2.6% y/y from +3.8% y/y in May, weaker than expectations of +2.7% y/y and the slowest pace of increase in 15 months.  However, Jun core CPI was unchanged from May at +2.6% y/y, stronger than the +2.5% y/y expected.

Swaps are discounting a 5% chance of a +25 bp ECB rate hike at its next policy meeting on Thursday.

US Stock Movers

Software stocks are under pressure today, weighing on the broader market. ServiceNow (NOW), Workday (WDAY), Datadog (DDOG), and Palantir Technologies (PLTR) are down more than -3%.  Also, Atlassian Corp (TEAM) is down more than -2%, and Autodesk (ADSK), Microsoft (MSFT), and Salesforce (CRM) are down more than -1%. 

Cybersecurity stocks are sliding today.  Zscaler (ZS) is down more than -2%, and CrowdStrike Holdings (CRWD), Palo Alto Networks (PANW), and Okta (OKTA) are down more than -2%.  Also, Cloudflare (NET) and Fortinet (FTNT) are down more than -1%.

Pegasystems (PEGA) is down more than -12% after reporting Q1 adjusted EPS of 35 cents, weaker than the consensus of 44 cents. 

Reddit (RDDT) is down more than -9% after the Wall Street Journal reported that the company has discussed cutting off Google’s access to its content for AI use. 

GE Vernova (GEV) is down more than -6% to lead losers in the S&P 500 after reporting Q2 adjusted Ebitda of $1.25 billion, below the consensus of $1.29 billion.

TE Connectivity Plc (TEL) is down more than -6% after announcing it entered into a definitive agreement to acquire Astrodyne TDI for about $1.4 billion. 

Cal-Maine Foods (CALM) is down more than -5% after reporting Q4 net sales of $552.6 million, weaker than the consensus of $594.5 million.

Otis Worldwide (OTIS) is down more than -2% after cutting its full-year adjusted EPS estimate to $4.01 to $4.05 from a previous estimate of $4.20 to $4.24, below the consensus of $4.19. 

Super Micro Computer (SMCI) is up more than +18% to lead gainers in the S&P 500 after saying its backlog rose to record levels at the end of 2026 with total new orders in excess of $60 billion received during Q4. 

AT&T (T) is up more than +4% after reporting Q2 wireless postpaid phone net additions of +432,000, well above the consensus of +325,264. 

Oklo (OKLO) is up more than +3%, and X-Energy (XE) is up more than +2% after Bloomberg News reported that the companies will join the US program to speed up development of new power plants for artificial intelligence data centers. 

Teledyne (TDY) is up more than +2% after reporting Q2 adjusted EPS of $6.28, well above the consensus of $5.79, and raising its full-year adjusted EPS estimate to $24.45 to $24.65 from a previous estimate of $23.85 to $24.15, above the consensus of $24.18.

DigitalOcean Holdings (DOCN) is up more than +1% after Stifel upgraded the stock to buy from hold with a price target of $160.

Earnings Reports(7/22/2026)

Alphabet Inc (GOOGL), AT&T Inc (T), AvalonBay Communities Inc (AVB), CME Group Inc (CME), Crown Castle Inc (CCI), CSX Corp (CSX), EastGroup Properties Inc (EGP), Equity LifeStyle Properties Inc (ELS), Equity Residential (EQR), First American Financial Corp (FAF), First Industrial Realty Trust (FR), GE Vernova Inc (GEV), Globe Life Inc (GL), Graco Inc (GGG), International Business Machine (IBM), Iridium Communications Inc (IRDM), Kinder Morgan Inc (KMI), Knight-Swift Transportation Ho (KNX), Las Vegas Sands Corp (LVS), Medpace Holdings Inc (MEDP), Molina Healthcare Inc (MOH), Moody's Corp (MCO), Northern Trust Corp (NTRS), Otis Worldwide Corp (OTIS), Packaging Corp of America (PKG), Philip Morris International Inc (PM), Pinnacle Financial Partners In (PNFP), PulteGroup Inc (PHM), QuantumScape Corp (QS), Raymond James Financial Inc (RJF), Reliance Inc (RS), RenaissanceRe Holdings Ltd (RNR), RLI Corp (RLI), Rollins Inc (ROL), RPM International Inc (RPM), SEI Investments Co (SEIC), ServiceNow Inc (NOW), Sonoco Products Co (SON), Southwest Airlines Co (LUV), Stifel Financial Corp (SF), TE Connectivity PLC (TEL), Teledyne Technologies Inc (TDY), Tesla Inc (TSLA), Texas Instruments Inc (TXN), Travel + Leisure Co (TNL), Westinghouse Air Brake Technol (WAB), WEX Inc (WEX), Wyndham Hotels & Resorts Inc (WH).