Rising Bond Yields Weigh on Stocks

Rich Asplund

Tue, May 19, 2026 at 11:21 AM EDT 6 min read

The S&P 500 Index ($SPX) (SPY) today is down -0.68%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.34%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.95%.  June E-mini S&P futures (ESM26) are down -0.75%, and June E-mini Nasdaq futures (NQM26) are down -1.02%.

Stock indexes are retreating today, with the S&P 500 and Nasdaq 100 falling to 1.5-week lows, and the Dow Jones Industrial Average to a 2-week low. The recent rally in technology stocks, fueled by the buildout of artificial intelligence, is faltering after powering the S&P 500 and Nasdaq 100 to record highs last week.  Rising bond yields and elevated crude oil prices have sparked risk-off sentiment in asset markets, leading to long liquidation in stocks.  The 10-year T-note yield climbed to a 16-month high of 4.69% today.

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Today’s US economic news was supportive for stocks after Apr pending home sales rose by +1.4% m/m, beating expectations of +1.0% m/m.  Also, Mar pending home sales were revised upward to +1.7% m/m from the previously reported +1.5% m/m.  In addition, software stocks are climbing today, lending some support to the overall market.

WTI crude oil prices (CLM26) remain extremely volatile and are susceptible to headlines from the Iran war.  Prices are down more than -1% today after President Trump late Monday said he called off a strike on Iran scheduled for Tuesday after Gulf allies asked for more time to give diplomacy a chance.  Last Wednesday, the International Energy Agency (IEA) said in a monthly report that global oil inventories declined at a rate of about 4 million bpd in March and April, and the market will remain “severely undersupplied” until October even if the conflict ends next month.  Goldman Sachs estimates that the current disruption has drawn down nearly 500 million bbl from global crude stockpiles, with the drawdown potentially reaching 1 billion bbl by June.

The markets are discounting a 4% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.

Earnings season is winding down, though reports thus far have been supportive of stocks.  As of today, 83% of the 454 S&P 500 companies that reported Q1 earnings have beaten estimates.  Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence.  Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.