Stocks Supported as Crude Oil Stabilizes

The S&P 500 Index ($SPX) (SPY) is up by +0.38% today, the Dow Jones Industrial Average ($DOWI) (DIA) is up by +0.69%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up by +0.09%.  E-mini S&P futures (ESU26) are up +0.37%, and September E-mini Nasdaq futures (NQU26) are up +0.08%.

Stock indices are finding support today as crude oil prices stabilize, temporarily easing inflation concerns.  Crude oil prices are consolidating below Thursday’s 1-month high today on comments from Iranian President Masoud Pezeshkian, who said it would be better to end the war with dignity.  Markets await Monday’s press conference, when US Treasury Secretary Bessent said the administration would give details on plans to isolate Iran’s economy. 

Some mild weakness in chipmakers and AI-infrastructure stocks today is limiting gains in the Nasdaq 100.  Also, higher bond yields are a drag on the broader market today, with the 10-year T-note yield up +3 bp to 4.73%. 

US economic news today is mixed for stocks.  The US Aug S&P manufacturing PMI fell -0.7 to 53.2, weaker than expectations of no change at 53.9, but the Aug S&P services PMI unexpectedly rose +2.8 to 56.8, stronger than expectations of a decline to 54.0 and the fastest pace of expansion in 4.5 years.

Cryptocurrency-exposed stocks are leading gainers in the broader market today, with Bitcoin's price soaring to a 3-month high.  Bitcoin (^BTCUSD) is up more than +6% today at a 3-month high and has rallied more than +20% this week. Institutional buying returned to support Bitcoin this week after the US Treasury announced it would at least double its long-dated bond buybacks, sparking a massive, short-covering rally in cryptocurrencies.  According to data from Coinglass, over $2 billion in short Bitcoin positions in the perpetual futures market have been liquidated since Wednesday. 

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.  Oct WTI crude oil prices (CLV26) are little changed today on comments from Iranian President Masoud Pezeshkian, who said, “It would be better to end the war today, now that we are strong and have dignity, with the whole world acknowledging our victory.”  Crude prices soared to a 1-month high on Thursday after President Trump threatened Iran and its trading partners with economic isolation. Mr. Trump said any country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face tremendous consequences. Treasury Secretary Bessent said the administration will announce its plan to isolate Iran and its trading partners on Monday. 

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.

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 86% of the 468 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. 

The markets are discounting a 39% 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 +0.64%.  China's Shanghai Composite closed up +0.04%.  Japan's Nikkei-225 Stock Average closed down -0.30%.

Interest Rates

September 10-year T-notes (ZNU6) are down by -6 ticks today.  The 10-year T-note yield is up +2.6 bp to 4.730%.  T-notes are under pressure today from a rally in stocks, which has curbed safe-haven demand for T-notes.  Also, today’s report showing the Aug S&P services PMI unexpectedly expanded at its fastest pace in 4.5-years is weighing on T-notes.

European government bond yields are moving lower today.  The 10-year German bund yield is down -0.0 bp to 3.250%.  The 10-year UK gilt yield is down -1.9 bp to 5.048%.

The Eurozone Aug S&P manufacturing PMI unexpectedly rose +0.9 to 52.8, stronger than expectations of a decline to 51.8 and the fastest pace of expansion in 4.25 years. Also, the Aug composite PMI unexpectedly rose +0.1 to 52.1, stronger than expectations of a decline to 51.7.

ECB July 1-year CPI expectations eased to 2.9% from 3.0% in June. The 3-year July CPI expectations eased to 2.7% from 2.8% in June.

The Eurozone Aug consumer confidence index unexpectedly rose +0.4 to a 6-month high of -15.5, stronger than expectations of a decline to -16.0.

UK July retail sales ex-auto fuel fell -0.9% m/m, weaker than expectations of -0.5% m/m and the biggest decline in 14 months.

Markets are discounting a 94% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.

US Stock Movers

Cryptocurrency-exposed stocks are soaring today as Bitcoin (^BTCUSD) extends this week’s sharp rally, climbing more than +6% to a 3-month high.  Coinbase Global (COIN) is up more than +9%, and Strategy (MSTR) is up more than +6% to lead gainers in the Nasdaq 100.  Also, Circle Internet Group (CRCL) is up more than +6%, and MARA Holdings (MARA) and Galaxy Digital Holdings (GLXY) are up more than +1%.

Mining stocks are rallying today, with copper, gold, and silver prices up sharply.  Freeport-McMoRan (FCX) is up more than +5%, and Southern Copper (SCCO) and Anglogold Ashanti (AU) are up more than +4%. Also, Newmont Corp (NEM) and Barrick Mining (B) are up more than +2%. 

Some chipmakers and AI-infrastructure stocks are falling today, limiting gains in the broader market.  Marvell Technology (MRVL) is down more than -6% to lead losers in the Nasdaq 100.  Also, Applied Materials (AMAT), Advanced Micro Devices (AMD), ARM Holdings Plc (ARM), Intel (INTC), and Lam Research (LRCX) are down more than -2%.  In addition, KLA Corp (KLAC), Western Digital (WDC), Micron Technology (MU), and Seagate Technology Holdings Plc (STX) are down more than -1%.

Moderna (MRNA) is up more than +13% to lead gainers in the S&P 500, and Merck & Co (MRK) is up more than +2% to lead gainers in the Dow Jones Industrials on positive carryover from Wednesday, when the companies reported that their cancer vaccine combined with Keytruda helped cut the recurrence of melanoma in a large, late-stage trial.

Ross Stores (ROST) is up more than +3% after reporting Q2 sales of $6.26 billion, better than the consensus of $6.16 billion, and raised its 2027 EPS forecast to $8.61 to $8.77 from a previous forecast of $7.50 to $7.74. 

Parsons Corp (PSN) is up more than +3% after Baird upgraded the stock to outperform from neutral with a price target of $57.

Teradyne (TER) is down more than -3% after Baird downgraded the stock to neutral from outperform.

Earnings Reports (8/21/2026)

BJ's Wholesale Club Holdings Inc (BJ), BRT Apartments Corp (BRT), Buckle Inc/The (BKE), Ubiquiti Inc (UI).