Stocks Settle Mixed as Iran War Remains Unresolved

Rich Asplund

Mon, May 18, 2026 at 4:35 PM EDT 8 min read

The S&P 500 Index ($SPX) (SPY) on Monday closed down -0.07%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.32%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.45%.  June E-mini S&P futures (ESM26) fell -0.12%, and June E-mini Nasdaq futures (NQM26) fell -0.48%.

Stock indexes gave up an early advance on Monday and settled mixed as crude oil prices whipsawed between gains and losses amid the stalemate between the US and Iran that has kept the Strait of Hormuz closed.  Crude prices recovered from early losses and climbed to a 3-week high on Monday when Iran said, despite draft changes, US demands for ending the war were "excessive and unrealistic." The rebound in crude oil prices pushed bond yields higher, weighing on stocks as the 10-year T-note yield climbed to a 15-month high of 4.63%.

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However, stocks bounced off their lows as crude oil prices tumbled more than -$2 a barrel Monday afternoon in post-market trading when President Trump said he canceled a scheduled attack on Iran on Tuesday after he was asked by leaders of Saudi Arabia, Qatar, and the United Arab Emirates to hold off for more time to pursue a diplomatic resolution.

Comments from President Trump on Sunday weighed on stocks and boosted crude oil prices when he said the "clock is ticking" on Iran and it "better get moving FAST on a peace deal, or there won't be anything left of them."  Also, ramped-up geopolitical tensions weighed on stocks after Reuters reported that Pakistan has deployed 8,000 troops, a squadron of fighter jets, and an air defense system to Saudi Arabia as part of a mutual defense pact, a deployment described as a "substantial, combat-capable force" to support Saudi Arabia if it comes under further attack.

Monday’s US economic news was supportive for stocks after the May NAHB housing market index rose +3 to 37, stronger than expectations of no change at 34.

Weaker-than-expected economic news from China is bearish for global growth prospects.  China Apr industrial production rose +4.1% y/y, weaker than expectations of +6.0% y/y. Also, China Apr retail sales rose +0.2% y/y, weaker than expectations of +2.0% y/y.  In addition, China Apr new home prices fell -0.19% y/y, the thirty-fifth consecutive month that prices have declined.