Stocks Pressured by a Rebound in Crude Prices and Bond Yields

Rich Asplund

Mon, May 18, 2026 at 11:25 AM EDT 7 min read

The S&P 500 Index ($SPX) (SPY) today is down -0.20%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.57%.  June E-mini S&P futures (ESM26) are down -0.28%, and June E-mini Nasdaq futures (NQM26) are down -0.57%.

Stock indexes gave up an early advance today and turned lower as crude oil prices whipsawed higher amid the stalemate between the US and Iran that has kept the Strait of Hormuz closed.  Crude prices recovered from early losses and pushed back into positive territory today 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 today at 4.63%.

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Stocks briefly moved higher today when crude oil prices temporarily fell more than -1% on hopes for a breakthrough in the standoff between the US and Iran over the Strait of Hormuz.  Crude prices retreated today after Tasnim, Iran's semi-official news agency, reported that the US has proposed a temporary waiver on Iran oil sanctions until a final peace agreement is reached.

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.

Today’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.