Stocks Rebound as Crude Oil Weakness Knocks Bond Yields Lower

The S&P 500 Index ($SPX) (SPY) is up by +0.40% today, the Dow Jones Industrial Average ($DOWI) (DIA) is up by +0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up by +0.94%.  E-mini S&P futures (ESU26) are up +0.35%, and September E-mini Nasdaq futures (NQU26) are up +0.94%.

Stock indices are climbing today, supported by weakness in crude oil prices, which is pushing bond yields lower.  WTI crude oil is down more than -3% today, easing inflation expectations and knocking the 10-year T-note yield down by -4 bp to 4.66%.  Chipmakers and AI-infrastructure stocks are also moving higher today, rebounding from recent weakness.  Short covering has emerged in chipmakers ahead of Nvidia’s quarterly earnings results after the close on Wednesday. 

The US June S&P Composite-20 Home Price Index rose +2.1% y/y, stronger than expectations of +1.8% y/y and the largest year-over-year increase in a year.

US Treasury Secretary Scott Bessent said Monday that the US will begin a campaign to sever Iran from the global economy, warning that any country doing business with Iran risks facing US sanctions.  He said the US is focusing on five of Iran's "most vital lifelines," including digital assets, technology, gold, aviation, and shipping, and that countries will have a defined timeline to shut down economic cooperation with Iran; if they don't, the Treasury will act unilaterally. 

Iran's secretary of the Supreme National Security Council said, "Iran will regard any country's participation in or support for America's economic war against the Iranian people as an act of war and not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf."

President Trump has 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.  Also, 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.

Oct WTI crude oil prices (CLV26) are down more than -3% today at a 1-week low after The New York Times reported the US State Department is preparing to send US diplomats back to embassies in the Middle East that were evacuated before and during the war with Iran, suggesting that the Trump administration does not anticipate a return to all-out hostilities with Iran.

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 40% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.

Overseas stock markets are higher today.  The Euro Stoxx 50 is up +0.29%.  China's Shanghai Composite recovered from a 2.5-week low and closed up +0.19%.  Japan's Nikkei-225 Stock Average recovered from a 2.5-week low and closed up +0.50%.

Interest Rates

September 10-year T-notes (ZNU6) are up by +9 ticks today.  The 10-year T-note yield is down -3.8 bp to 4.658%.  T-notes are moving higher today amid the -3% plunge in WTI crude oil prices, which eases inflation expectations.  rose on Monday amid weakness in crude oil prices, which weakened inflation expectations.  T-notes also have carryover support from Monday when CNBC reported that the Treasury could use the Treasury General Account, which had a balance of $935 billion on August 20, to fund expanded buybacks of higher-yielding, older government securities.   

Supply pressures are negative for T-note prices as the Treasury will auction $211 billion of T-notes and floating rate notes this week, beginning with today’s $69 billion auction of 2-year T-notes.  

European government bond yields moved lower on Monday.  The 10-year German bund yield fell to a 1-week low of 3.211% and is down -3.3 bp to 3.220%.  The 10-year UK gilt yield dropped to a 1-week low of 4.992% and is down -5.2 bp to 5.005%.

The German Aug IFO business climate survey rose +2.1 to a 1-year high of 88.8, stronger than expectations of 87.2.

German Q2 GDP was revised upward to +0.3% q/q and +1.0% y/y from the previously reported +0.2% q/q and +0.9% 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

Chipmakers and AI-infrastructure stocks are moving higher today, supporting gains in the broader market.  Marvell Technology (MRVL) is up more than +7% to lead gainers in the S&P 500 and Nasdaq 100, and Advanced Micro Devices (AMD) is up more than +3%.  Also, ARM Holdings Plc (ARM), Sandisk (SNDK), Intel (INTC), and Western Digital (WDC) are up more than +2%.  In addition, Nvidia (NVDA) is up more than +2% to lead gainers in the Dow Jones Industrials, and ASML Holding NV (ASML), KLA Corp (KLAC), Lam Research (LRCX), and Qualcomm (QCOM) are up more than -1%. 

Energy producers and service providers are retreating today, with WTI crude oil down more than -3% at a 1-week low.  APA Corp (APA) and Devon Energy (DVN) are down more than -2%.  Also, Chevron (CVX), ConocoPhillips (COP), Diamondback Energy (FANG), ExxonMobil Holding (XOM), Halliburton (HAL), Marathon Petroleum (MPC), Phillips 66 (PSX), Occidental Petroleum (OXY), and Valero Energy (VLO) are down more than -1%.

Madison Air Solutions Corp (MAIR) is up more than +14% after announcing a private placement of approximately $2.25 billion of the company’s class A common stock. 

Moderna (MRNA) is up more than +5% after Wolfe Research upgraded the stock to peer perform from underperform  

Navitas Semiconductor (NVTS) is up more than +3% after announcing it acquired Claros Inc for about $233 million. 

Shift4 Payments (FOUR) is up more than +3% after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $59.

Dicks Sporting Goods (DKS) is down more than -23% after reporting Q2 net sales of $5.59 billion, weaker than the consensus of $5.65 billion, and cutting its 2027 net sales forecast to $21.9 billion to $22.2 billion from a previous estimate of $22.1 billion to $22.4 billion. 

Five Below (FIVE) is down more than -1% after Loop Capital Markets downgraded the stock to hold from buy, citing “current valuation levels.” 

Earnings Reports (8/25/2026)

Dick's Sporting Goods Inc (DKS), HEICO Corp (HEI), Intuit Inc (INTU), Semtech Corp (SMTC), Zoom Communications Inc (ZM).