Stocks Settle Lower on Rising Bond Yields

Rich Asplund

Tue, May 19, 2026 at 4:35 PM EDT 6 min read

The S&P 500 Index ($SPX) (SPY) on Tuesday closed down -0.67%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -0.65%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.61%.  June E-mini S&P futures (ESM26) fell -0.70%, and June E-mini Nasdaq futures (NQM26) fell -0.63%.

Stock indexes finished lower on Tuesday, 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 on Tuesday sparked risk-off sentiment in asset markets, prompting a wave of stock liquidation.  The 10-year T-note yield climbed to a 16-month high of 4.69% on Tuesday.

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Tuesday’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.

WTI crude oil prices (CLM26) remain extremely volatile and are susceptible to headlines from the Iran war.  Prices fell nearly -1% on Tuesday after President Trump said that Iran is "being reasonable" and that he will "maybe" give them until early next week to make a peace deal.  Late Monday, President Trump 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 6% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.