Stocks Mixed on Lower Bond Yields and Chip Stock Weakness

The S&P 500 Index ($SPX) (SPY) is up by +0.33% today, the Dow Jones Industrial Average ($DOWI) (DIA) is up by +0.47%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.33%.  E-mini S&P futures (ESU26) are up +0.31%, and September E-mini Nasdaq futures (NQU26) are down -0.39%.

Stock indices are mixed today, with the Nasdaq 100 falling to a 1.5-week low.  The broader market is supported today by lower US bond yields.  The 10-year T-note yield dropped -6 bp to 4.64% today after the US Treasury announced that it will boost liquidity and double the size of buybacks for longer-dated nominal coupon securities to at least $4 billion.   However, weakness in chipmaker and AI-infrastructure stocks continued today, weighing on the Nasdaq 100. 

Also, on the positive side for stocks, Moderna is up more than +110% after announcing a positive result from its personalized cancer vaccine trial with Merck & Co.  In addition, the Trump administration today delayed 50% tariffs on some Canadian products for three days, less than two hours before the tariffs were set to take effect, saying that the two sides had reached a tentative agreement. 

US MBA mortgage applications fell -0.4% in the week ended August 14, with the purchase mortgage sub-index down -2.0% and the refinancing mortgage sub-index up +1.5%.  The average 30-year fixed-rate mortgage was unchanged from the prior week at 6.77%.

The lack of a clear path to a resolution in the Middle East is keeping the Strait of Hormuz closed and limiting crude supplies from the Middle East, keeping upward pressure on oil prices.  Sep WTI crude oil prices (CLU26) climbed to a fresh 3-week high today as Middle East tensions intensified after the United Arab Emirates said it was cutting all economic ties with Iran after accusing Iran of firing ballistic missiles at its territory.   

President Trump said he's not interested in extending the expired agreement with Iran, dimming prospects for a swift reopening of the Strait of Hormuz.  Mr. Trump also said that the US naval blockade on Iranian ports is putting pressure on the country, and he has no timeline for resolving the US-Iran conflict.

On Monday, US Energy Secretary Chris Wright said that the US is playing the long game with Iran, implying the US has no plans to de-escalate the conflict, potentially limiting crude supplied from the Middle East.

Treasury Secretary Bessent said last week that the administration will soon announce unprecedented economic measures against Iran that “have never been seen in the history of economic isolation of a country.”  The economic measures would add to the current US naval blockade of Iranian ports. 

There have been no signs of progress toward a US-Iran agreement to fully open the Strait of Hormuz.  An Iranian military spokesperson said last Thursday that no ship can safely pass the Strait of Hormuz without Iran’s authorization and supervision and that President Trump’s claims of control over the Strait are “nothing more than lies.”  The Iranian statement was in response to President Trump's comment last Tuesday that the US has “total control over the Hormuz Strait” and that “we own it.” 

The outlook for strong Q2 earnings is a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence.  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, with 85% of the 459 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. 

The markets are discounting a 33% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is up +0.09%.  China's Shanghai Composite fell to a 1.5-week low and closed down -2.40%.  Japan's Nikkei-225 Stock Average slid to a 1.5-week low and closed down sharply by -3.16%.

Interest Rates

September 10-year T-notes (ZNU6) are up by +10 ticks today.  The 10-year T-note yield is down -5.6 bp to 4.649%.  Sep T-notes are climbing today after the US Treasury announced that it will at least double the maximum size of its liquidity support buyback operations for longer-dated nominal coupon sizes to at least $4 billion per operation, effective September 9.  

Gains in T-notes are limited amid higher crude oil prices, as WTI crude oil climbed to a 3-week high today, boosting inflation expectations.  The 10-year breakeven inflation rate rose to a 2-month high of 2.313% today.  Supply pressures are also weighing on T-notes as the Treasury will auction $16 billion of 20-year T-bonds later today. 

European government bond yields are moving lower today.  The 10-year German bund yield fell from a 15-year high of 3.275% and is down -1.7 bp to 3.242%.  The 10-year UK gilt yield is down -6.0 bp to 5.020%.

UK July CPI rose +2.9% y/y, right on expectations.  July core CPI rose +2.6% y/y, stronger than expectations of +2.5% y/y.

Markets are discounting a 95% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.

US Stock Movers

Mining stocks are up sharply today after metals prices surged when the Treasury announced that it was boosting its buybacks of longer-dated US government debt.  Newmont Corp (NEM), Hecla Mining (HL), and Coeur Mining (CDE) are up more than +7%, and Anglogold Ashanti (AU) and Barrick Mining (B) are up more than +6%.  Also, Southern Copper (SCCO) and Freeport McMoRan (FCX) are up more than +2%.

Software stocks are climbing today, a supportive factor for the overall market. ServiceNow (NOW), Palantir Technologies (PLTR), and Workday (WDAY) are up more than +2%.  Also, Intuit (INTU), Adobe Systems (ADBE), Atlassian Corp (TEAM), Salesforce (CRM), Thomson Reuters (TRI), and Autodesk (ADSK) are up more than +1%. 

Chipmakers and AI-infrastructure stocks are sliding for a second day today, weighing on the broader market.  The iShares Semiconductor ETF (SOXX) is down more than -2%.  Broadcom (AVGO), Seagate Technology Holdings Plc (STX), Intel (INTC), Applied Materials (AMAT), Western Digital (WDC), and Lam Research (LRCX) are down more than -4%, and Advanced Micro Devices (AMD), ARM Holdings Plc (ARM), Sandisk (SNDK), and KLA Corp (KLAC) are down more than -3%.

Moderna (MRNA) is up more than +110% to lead gainers in the S&P 500, and Merck & Co (MRK) is up more than +10% to lead gainers in the Dow Jones Industrials after the companies said their joint personalized vaccine helped cut the recurrence of melanoma in a larger, late-stage trial. 

Marvell Technology (MRVL) is up more than +9% to lead gainers in the Nasdaq 100 after announcing an expanded chip-development partnership with Alphabet, including a warrant from Marvell allowing Google to buy as much as $12.2 billion in Marvell stock. 

Estee Lauder (EL) is up more than +17% after reporting Q4 net sales of $3.63 billion, better than the consensus of $3.55 billion. 

Norfolk Southern Corp. (NSC) is up more than +3% and Union Pacific (UNP) is up more than +2% after a federal regulator said the company and Union Pacific can move forward with plans to create the first coast-to-coast freight network in the US.

La-Z-Boy (LZB) is down more than -13% after forecasting Q2 sales of $475.7 million, well below the consensus of $537 million. 

Nebius Group NV (NBIS) is down more than -11% to lead losers in the Nasdaq 100 after announcing the sale of $4.5 billion in aggregate of convertible senior notes due 2030 and 2034. 

Mercury Systems (MRCY) is down more than -5% after reporting Q4 adjusted EPS of 37 cents, below the consensus of 38 cents. 

Earnings Reports (8/19/2026)

Analog Devices Inc (ADI), BILL Holdings Inc (BILL), Estee Lauder Cos Inc/The (EL), Lowe's Cos Inc (LOW), Nordson Corp (NDSN), Target Corp (TGT), TJX Cos Inc/The (TJX), Viking Holdings Ltd (VIK).