Stocks End Slightly Lower as T-note Yields Rise

The S&P 500 Index ($SPX) (SPY) on Tuesday fell -0.21%, the Dow Jones Industrial Average ($DOWI) (DIA) fell -0.07%, and the Nasdaq 100 Index ($IUXX) (QQQ) fell -0.04%.  March E-mini S&P futures (ESH26) fell -0.11%, and March E-mini Nasdaq futures (NQH26) rose +0.08%.

Bearish factors for stocks included Tuesday’s rise of more than +5 bp in the 10-year T-note yield and continued jitters about the war in Iran. The Pentagon said the US military conducted its most intensive day of bombing yet on Tuesday.  Also, the largest refinery in the UAE was forced to close due to a drone attack, and there was a report of an explosion involving a tanker near the UAE. 

Stocks had underlying support from Tuesday’s -12% plunge in oil prices, which was positive for the US economy and dovish for Fed policy.  Stocks also received support from the stronger-than-expected US Feb existing home sales report, which rose +1.7% m/m to 4.09 million, versus expectations of a decline to 3.88 million.

WTI oil prices on Tuesday fell sharply by -12% on President Trump’s insistence that the Iran war will be over very soon, and as plans are being laid for a possible G-7 release of oil stockpiles.  G-7 finance ministers said on Monday that the G-7 nations stand ready to release oil stockpiles if needed.  G-7 energy ministers met Tuesday at the International Energy Agency in Paris, where they discussed a coordinated release of G-7 oil stockpiles.

President Trump said on Monday that the Iran war is “pretty much” over. At a press conference Monday evening, President Trump was asked when the war would end, and he answered, “I think soon, very soon.” 

Crude oil prices also fell on Tuesday after US Energy Secretary Chris Wright posted on social media that the US Navy had escorted a tanker through the Strait of Hormuz, raising market hopes that the US military was beginning an escort mission to reopen the Strait.  However, White House Press Secretary Karoline Leavitt said later on Tuesday that the Wright post was erroneous and that the US Navy did not escort a tanker through the Strait.  That denial caused oil prices to rise from the daily lows.

Iran has shown no signs of backing down, despite the withering air campaign launched by Israel and the US.  Iran's Assembly of Experts over the weekend appointed hardliner Mojtaba Khamenei as Iran's new supreme leader, the son of Ayatollah Ali Khamenei.  Iran's new leader has close ties to Iran's powerful and entrenched Islamic Revolutionary Guard Corps (IRGC).  President Trump said he is "not happy" with the choice of the new leader.

Q4 earnings season is nearly over, with more than 95% of the S&P 500 companies having reported earnings results.  Earnings have been a positive factor for stocks, with 74% of the 492 S&P 500 companies that have reported beating expectations.  According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth.  Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.

The markets are discounting a 0% chance for a -25 bp rate cut at the next policy meeting on March 17-18.

Overseas stock markets closed higher on Tuesday, supported by Monday afternoon’s recovery in US stocks.  The Euro Stoxx 50 rose +2.67%, following Monday’s -0.61% loss.  China's Shanghai Composite closed up +0.65%.  Japan's Nikkei Stock 225 closed up +2.88%, recovering part of Monday’s sharp -5.2% loss.

Interest Rates

June 10-year T-notes (ZNM6) fell by -1 tick.  The 10-year T-note yield rose +5.8 bp to 4.154%.  The 10-year T-note yield rose amid soft demand at the 3-year T-note auction and confirmation that the US Navy did not escort a tanker through the Strait of Hormuz, which dashed hopes that the US Navy was beginning a program to reopen the Strait and boosted safe-haven demand. 

Also, the 10-year breakeven inflation expectations rate on Tuesday rose by +1.8 bp to 2.347% despite the plunge in oil prices.  The stronger-than-expected US existing home sales report also pushed the T-note yield higher.

Treasury supply pressures are a bearish factor this week, with the Treasury due to sell 10-year T-notes on Wednesday and 30-year bonds on Thursday.

European government bond yields closed lower.  The 10-year German bund yield fell -2.2 bp to 2.836%. The 10-year UK gilt yield fell -9.3 bp to 4.554%. 

Swaps are discounting a 1% chance of a -25 bp ECB rate hike at its next policy meeting on March 19.

US Stock Movers

The Magnificent Seven technology stocks all closed higher except for Microsoft.  The largest gainers were Nvidia (NVDA) and Meta Platforms (META), with gains of more than +1%.

Chip stocks closed mostly higher, supporting the Nasdaq 100 index.  Micron Technology (MU) rose more than +3%. Intel (INTC), Arm Holdings (ARM), and Applied Materials (AMAT) rose by more than +2%.

Oil stocks closed mostly lower due to the plunge in oil prices.  Occidental Petroleum (OXY) fell more than -3%.  Devon Energy (DVN), ConocoPhillips (COP), and Diamondback Energy (FANG)

fell more than -2%.

Hewlett-Packard Enterprise (HPE) fell by -3.4% after reporting slightly weaker-than-expected revenue, although other results beat expectations.

AT&T (T) rose +0.5% after saying it will spend more than $250 billion over the next five years to expand its telecom network infrastructure in the US, more than doubling its recent capital investment.

Casey’s General Stores (CASY) rose +3.7% despite reporting disappointing revenue for fiscal Q3.

Strive Inc (ASST) rose more than +5%, while Strategy Inc (MSTR) fell -0.5%, after B. Riley Securities initiated coverage of the Bitcoin treasury companies with buy ratings.

Earnings Reports(3/11/2026)

Campbell's Company (CPB).