Stocks Retreat as Inflation Fears Push Bond Yields Higher

The S&P 500 Index ($SPX) (SPY) today is down -0.43%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.59%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.44%.  March E-mini S&P futures (ESH26) are down -0.40%, and March E-mini Nasdaq futures (NQH26) are down -0.41%.

Global stock and bond markets are selling off today on concerns that the world’s central banks will tighten monetary policy to keep inflation in check as energy prices soar amid an escalating war in Iran.  Stocks added to Wednesday’s sharp losses today, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 falling to 3.75-month lows. 

Hawkish comments today from the BOE, ECB, and BOJ pushed bond global yields higher as they warned that the Iran war poses upside inflation risks, fueling speculation that the central banks may pursue tighter monetary policies. The 10-year German Bund yield rose to a 2.25-year high of 3.01%, the 10-year T-note yield rose to a 6.75-month high of 4.32%, and the 10-year UK Gilt yield climbed to a 14-month high of 4.91%.   

European natural gas prices are up more than +12% at a 3-year high after Qatar reported “extensive damage” at the world’s largest natural gas export plant at Ras Laffan Industrial City.  Reuters reported today that Iran’s strikes damaged 17% of Ras Laffan’s LNG export capacity, which will take three to five years to repair.

Stock losses accelerated today as bond yields rose further on stronger-than-expected US economic data from weekly jobless claims and the Mar US Philadelphia Fed business outlook survey.  However, T-note yields fell back from their highs after Jan new home sales fell more than expected to a 3.25-year low.

US weekly initial unemployment claims unexpectedly fell -8,000 to a 9-week low of 205,000, showing a stronger labor market than expectations of an increase to 215,000.

The Mar US Philadelphia Fed business outlook survey unexpectedly rose +1.8 to a 6-month high of 18.1, stronger than expectations of a decline to 8.0.

US Jan new home sales fell -17.6% m/m to a 3.25-year low of 587,000, weaker than expectations of 722,000.

WTI crude oil prices (CLJ26) fell back from a +3% surge in overnight trading after President Trump pressed for de-escalation of attacks on Middle East energy sites, following Iranian and Israeli strikes on major gas fields, which pushed energy prices sharply higher. Mr. Trump said the US wasn't involved in the South Pars attack and said Israel would refrain from further strikes on the site.  However, crude prices bounced higher again after a statement today from the semi-official Iranian Students' News Agency (ISNA) said Iran's response to the attacks on its energy infrastructure "is underway and not yet complete." Iran said it will target energy infrastructure in Saudi Arabia, Qatar, and the UAE in retaliation for US and Israeli airstrikes on its South Pars gas field and its Asaluyeh oil industry facilities. 

Crude oil prices remain high despite attempts to boost global supplies. The IEA last Wednesday released 400 million barrels from emergency oil stockpiles and said the war against Iran is disrupting 7.5% of global oil supply, and the conflict will cut global oil supply by 8 million bpd this month.  The closure of the Strait of Hormuz, through which about a fifth of the world’s oil and natural gas flows, has choked off oil and gas flows due to Iran’s attacks on shipping in the waterway and forced Gulf producers to cut output because they can’t export from the region.  Iran has attacked about 20 vessels in the Persian Gulf and near Hormuz since the conflict began.  Goldman Sachs warns that crude prices could exceed the 2008 record high of close to $150 a barrel if flows through the Strait of Hormuz remain depressed through March.

The markets are discounting a 6% chance for a -25 bp FOMC rate hike at the April 28-29 policy meeting.

Overseas stock markets are sharply lower today.  The Euro Stoxx 50 fell to a 1.5-week low and is down -1.96%.  China's Shanghai Composite dropped to a 2.5-month low and closed down -1.39%.  Japan's Nikkei Stock 225 closed down -3.38%.

Interest Rates

June 10-year T-notes (ZNM6) today are down by -6 ticks.  The 10-year T-note yield is up +0.6 bp to 4.271%.  June T-notes fell to a contract low today, and the 10-year T-note yield jumped to a 6.75-month high of 4.322%.  T-notes are under pressure on negative carryover from Wednesday, when Fed Chair Powell said there will be no Fed rate cuts unless there is progress on inflation. T-notes extended their losses today after weekly jobless claims unexpectedly fell to a 9-week low and the March Philadelphia Fed business outlook survey unexpectedly rose to a 6-month high.  However, T-notes recovered from their worst level after Jan new home sales fell more than expected to a 3.25-year low.

European government bond yields are moving higher today.  The 10-year German bund yield jumped to a 2.25-year high of 3.011% and is up +1.8 bp to 2.957%.  The 10-year UK gilt yield climbed to a 14-month high of 4.914% and is up +10.0 bp to 4.838%.

The ECB, as expected, kept the deposit facility rate unchanged at 2.00% and said the Iran war poses upside inflation risks and downside risks to economic growth.

The ECB cut its 2026 Eurozone GDP forecast to 0.9% from 1.2% in December and raised its 2026 inflation forecast ex-food and energy to 2.3% from 2.2%.

The BOE, as expected, voted 9-0 to keep the official bank rate unchanged at 3.75% and said all members "stand ready to act" to contain any inflation surge triggered by the war in the Middle East.

BOE Governor Andrew Bailey warned that policy must "respond to the risk of a more persistent effect on UK CPI inflation and whatever happens, our job is to make sure inflation gets back to its 2% target."

Swaps are discounting a 51% chance of a +25 bp ECB rate hike at its next policy meeting on April 30.

US Stock Movers

The Magnificent Seven technology stocks are weaker today, weighing on the overall market.  Tesla (TSLA) is down more than -2%, and Amazon.com (AMZN), Nvidia (NVDA), and Meta Platforms (META) are down more than -1%.  Also, Alphabet (GOOGL) is down -0.72%, Microsoft (MSFT) is down -0.40%, and Apple (AAPL) is down -0.10%. 

Mining stocks added to this week’s sell-off today, as gold and silver prices fell to 6-week lows and copper prices dropped to a 3-month low.  Anglogold Ashanti Ltd (AU) is down more than -7%, and Newmont Mining (NEM) is down more than -6% to lead losers in the S&P 500.  Also, Freeport-McMoRan (FCX), Coeur Mining (CDE), Hecla Mining (HL), Barrick Mining (B), and Southern Copper (SCCO) are down more than -5%.

Materials stocks are sliding today as surging oil prices have boosted industrial production costs. International Paper (IP) is down more than -4%, and PPG Industries (PPG) and Smurfit Westrock Plc (SW) are down more than -3%.  Also, LyondellBasell Industries NV (LYB) and Vulcan Materials (VMC) are down more than -1%.

US natural gas producers are climbing today on the outlook for additional US LNG exports after “extensive damage” was reported from Iranian missile and drone attacks at Qatar’s Ras Laffan gas plant, the world’s largest natural gas export plant.  Cheniere Energy (LNG) is up more than +10%, and Antero Resources (AR) and Expand Energy (EXE) are up more than +5%.  Also, EOG Resources (EOG) is up more than +1%.

Kinsale Capital Group (KNSL) is down more than -4% after Jeffries downgraded the stock to underperform from hold with a price target of $312. 

Micron Technology (MU) is down more than -3% after forecasting full-year capital spending of $25 billion, above the consensus of $22.4 billion. 

Five Below (FIVE) is up more than +10% after reporting Q4 net sales of $1,73 billion, better than the consensus of $1.71 billion, and forecasting 2027 net sales of $5.20 billion to $5.30 billion, the midpoint above the consensus of $5.21 billion.

Accenture (ACN) is up more than +6% to lead gainers in the S&P 500 after reporting Q2 revenue of $18.04 billion, better than the consensus of $17.86 billion. 

Align Technology (ALGN) is up more than +3% after Bloomberg reported that Elliot Investment Management has built a significant stake in the company. 

Rivian Automotive (RIVN) is up more than +3% after Uber Technologies said it will invest up to $1.25 billion in Rivian to help launch a robotaxi fleet.

Darden Restaurants (DRI) is up more than +1% after forecasting Q4 adjusted EPS of $3.59 to $3.69, stronger than the consensus of $3.57. 

Earnings Reports(3/19/2026)

Accenture PLC (ACN), Darden Restaurants Inc (DRI), FedEx Corp (FDX).