Stocks Stabilize as Crude Oil Prices and Bond Yields Ease

The S&P 500 Index ($SPX) (SPY) is up by +0.16% today, the Dow Jones Industrial Average ($DOWI) (DIA) is up by +0.42%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.20%.  E-mini S&P futures (ESU26) are up +0.10%, and September E-mini Nasdaq futures (NQU26) are down -0.25%.

Stock index futures recovered from overnight losses and are mostly higher today as a retreat in crude oil prices knocked bond yields lower. Crude oil prices gave up an overnight advance and turned lower today when US Energy Secretary Wright said that over 17 million bbl of oil went through the Strait of Hormuz on Monday, easing supply concerns.  That knocked the 10-year T-note yield down -1 bp to 4.79%, benefiting stocks.  Bond yields also remained lower after the Aug ADP employment change rose less than expected.

Stock index futures initially moved lower in overnight trade as US-Iran hostilities pushed crude oil prices to a 6-week high and the 10-year T-note yield up to a 2.75-year high of 4.82%.  Stocks were under pressure as global bond yields stayed elevated on US-Iran hostilities, which extended crude oil’s advance and threatened to worsen the inflation outlook. 

Weakness in cybersecurity stocks today is weighing on the Nasdaq 100.

The global bond sell-off generally continued today, pushing bond yields to multi-year highs and undercutting stocks.  The UK 10-year gilt yield surged to a 19-year high of 5.29%, the German 10-year bund yield jumped to a 15-year high of 3.39%, the Japanese 10-year JGB bond yield surged to a 30-year high of 3.04%, and the 10-year T-note yield rose to a 2.75-year high of 4.82%. 

US MBA mortgage applications rose +0.8% in the week ended August 28, with the purchase mortgage sub-index up +2.2% and the refinancing mortgage sub-index down -1.1%.  The average 30-year fixed-rate mortgage rose +1 bp to 6.79% from 6.78% in the prior week.

The US Aug ADP employment change rose by +38,000, showing a slightly weaker labor market than expectations of +47,000.

Oct WTI crude oil prices (CLV26) fell from a 6-week high today and turned lower as supply concerns abated after US Energy Secretary Wright said that over 17 million bbl of oil went through the Strait of Hormuz on Monday.  Crude prices initially rallied in overnight trade as fighting intensified between the US and Iran.  The US carried out a second round of strikes in three days overnight, targeting radar systems and mine-laying capabilities along Iran's southern coast.  Iran retaliated with drone and missile attacks on US bases across the Middle East.  Also, Axios reported that the US attacked two Iranian tankers anchored off Iran’s north coast under a new “tanker for tanker” policy approved by President Trump to further deter Iranian attacks on tankers that move through the Strait of Hormuz. 

Q2 earnings results are 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 489 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. 

The markets are discounting a 63% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.

Overseas stock markets are lower today.  The Euro Stoxx 50 dropped to a 1-month low and is down -0.08%. China's Shanghai Composite closed down -0.97%.  Japan's Nikkei-225 Stock Average fell to a 4-week low and closed down -2.85%.

Interest Rates

December 10-year T-notes (ZNZ6) are up by +2 ticks today.  The 10-year T-note yield is down -0.8 bp to 4.790%.  T-notes recovered from a 1.75-year nearest-futures low today and turned higher, and the 10-year T-note yield fell from a 2.75-year high of 4.816% and moved lower.  Short covering emerged and pushed T-notes higher after WTI crude fell from a 6-week high and turned lower, easing inflation expectations.  T-notes added to their gains today when the Aug ADP employment change rose less than expected, a dovish factor for Fed policy. 

European government bond yields are moving higher today.  The 10-year German bund yield climbed to a 15-year high of 3.395% and is up +3.1 bp to 3.374%.  The 10-year UK gilt yield jumped to a 19-year high of 5.289% and is up +0.9 bp to 5.229%.

ECB Governing Council member and Bundesbank President Joachim Nagel warned that "inflation isn't close to our medium-term target" and said, "markets are pricing in a probability of more than 95% that we'll raise interest rates at our September meeting, and I'd say that the markets have a rather good understanding of how we're likely to respond at this stage."

Markets are discounting a 99% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.

US Stock Movers

Palo Alto Networks (PANW) is down more than -8% to lead cybersecurity stocks lower and lead losers in the Nasdaq 100 after reporting Q4 subscription and support revenue of $2.67 billion, below the consensus of $2.68 billion. Also, CrowdStrike Holdings (CRWD) is down more than -3%, and Cloudflare (NET), SentinelOne (S), Fortinet (FTNT), and Zscaler (ZS) are down more than -2%.  In addition, Okta (OKTA) is down more than +1%. 

Credo Technology (CRDO) is down more than -16% despite reporting better-than-expected Q EPS as the company failed to exceed its Q1 adjusted gross margin estimate of 68%. 

MongoDB (MDB) is down more than -13% despite reporting better-than-expected Q2 EPS as revenue growth in the company’s Atlas product didn’t accelerate in Q2 versus Q1. 

PG&E (PCG) is down more than -9% to lead losers in the S&P 500, and Edison International (EIX) is down more than -7% after analysts said it is unlikely that California legislators will hold a special session to pass a wildfire liability bill favorable to utilities.

G-III Apparel Group Ltd (GIII) is down more than -3% after reporting Q2 net sales of $554.1 million, weaker than the consensus of $570.3 million, and forecasting Q3 net sales of about $870 million, below the consensus of $899 million.

Gitlab (GTLB) is up more than +14% after boosting its 2027 revenue forecast to $1.13 billion from a previous forecast of $1.11 billion to $1.12 billion, better than the consensus of $1.12 billion.

Dell Technologies (DELL) is up more than +5% to lead gainers in the S&P 500 after reporting Q2 total net revenue of $46.97 billion, well above the consensus of $44,78 billion, and raising its 2027 revenue forecast to $192 billion from a previous forecast of $165 billion to $169 billion, stronger than the consensus of $173.76 billion.

Brown-Forman (BF.B) is up more than +5% after reporting a Q1 gross margin of 60.2%, better than the consensus of 58.6%. 

SiriusXM (SIRI) is up more than +5% after Deutsche Bank upgraded the stock to buy from hold with a price target of $45.

Johnson & Johnson (JNJ) is up more than +3% to lead gainers in the Dow Jones Industrials after UBS raised its price target on the stock to $320 from $280.

Earnings Reports (9/2/2026)

Broadcom Inc (AVGO), Brown-Forman Corp (BF/B), Five Below Inc (FIVE), Hewlett Packard Enterprise Co (HPE), NetApp Inc (NTAP), Ollie's Bargain Outlet Holding (OLLI), PVH Corp (PVH), Snowflake Inc (SNOW).