June S&P 500 E-Mini futures (ESM26) are trending down -0.95% this morning as a jump in oil prices drove Treasury yields higher, abruptly halting the AI-fueled equity rally.
The price of WTI crude climbed over +3% on Friday amid a lack of progress towards reopening the Strait of Hormuz. President Trump said in an interview with Fox News after his first round of talks with Chinese leader Xi Jinping in Beijing that the U.S. does not need to reopen the strait. Hours later, however, Mr. Trump said the country wanted the key waterway reopened. Mr. Trump also said he would not be much more patient with Iran.
Treasury yields climbed to multi-month highs across maturities on Friday as rising oil prices stoked inflation fears. The 10-year T-note yield rose five basis points to 4.54%, hitting its highest level in nearly a year. Investors now see roughly a 50% probability of a 25 basis point Fed rate hike by year-end and are fully pricing in a move by March 2027.
Investors were also focused on the summit between U.S. President Trump and Chinese leader Xi Jinping. Mr. Trump said his visit had been “incredible” and added, “I think a lot of good has come of it.” “We’ve made some fantastic trade deals for both countries,” he said. Xi said the two sides have established a “new relationship” and mentioned “a lot of results.” A U.S. readout from the summit, along with details of commercial deals, is expected to be released in the coming days.
Investors are now awaiting the Federal Reserve’s industrial production report.
In yesterday’s trading session, Wall Street’s major indices closed in the green, with the S&P 500 and Nasdaq 100 posting new record highs. Cisco Systems (CSCO) jumped over +13% and was the top percentage gainer on all three major Wall Street averages after the networking giant posted upbeat FQ3 results, issued FQ4 guidance that blew past estimates, and announced plans to cut thousands of jobs. Also, cybersecurity stocks advanced, with Palo Alto Networks (PANW) rising more than +4% and Okta (OKTA) gaining over +3%. In addition, Nvidia (NVDA) climbed more than +4% after Reuters reported that the chipmaker had secured U.S. approval to sell H200 chips to roughly 10 Chinese companies. On the bearish side, Doximity (DOCS) sank -23% after the telehealth company posted weaker-than-expected FQ4 adjusted EPS and issued below-consensus FY27 revenue guidance.
Economic data released on Thursday showed that U.S. retail sales rose +0.5% m/m in April, in line with expectations, and core retail sales, which exclude motor vehicles and parts, grew +0.7% m/m, in line with expectations. At the same time, the number of Americans filing for initial jobless claims in the past week rose by +12K to 211K, compared with the 205K expected. In addition, the U.S. import price index jumped +1.9% m/m in April, stronger than expectations of +1.0% m/m.
“April retail sales echoed what we’ve heard across corporate conference calls for weeks now: The U.S. consumer remains resilient despite soaring gas prices. When it comes to stocks, though, tech is in the driver’s seat right now, not the consumer,” said Bret Kenwell at eToro.
Kansas City Fed President Jeff Schmid said on Thursday that inflation poses the biggest risk to the U.S. economy, which has demonstrated “remarkable resilience” amid numerous challenges, and that the labor market remains stable. “While inflation has moderated significantly from its peak, in my discussions with business leaders across the Tenth District, it is clear that it is still too high,” Schmid said.
Meanwhile, U.S. rate futures have priced in a 99.4% chance of no rate change and a 0.6% chance of a 25 basis point rate cut at June’s monetary policy meeting.
Today, investors will focus on U.S. Industrial Production and Manufacturing Production data, set to be released in a couple of hours. Economists project Industrial Production to rise +0.3% m/m and Manufacturing Production to rise +0.2% m/m in April, compared to the March figures of -0.5% m/m and -0.1% m/m, respectively.
The New York Fed-compiled Empire State Manufacturing Index will also be released today. Economists expect the May figure to come in at 7.3, compared to 11.0 in April.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.54%, up +1.16%.
The Euro Stoxx 50 Index is down -1.78% this morning, snapping a two-day winning streak as investor enthusiasm for tech stocks gave way to inflation concerns, pushing bond yields higher and boosting expectations of interest rate hikes from the European Central Bank this year. Oil prices climbed on Friday as the U.S. and Iran remained locked in a diplomatic stalemate, with few signs of progress toward reopening the Strait of Hormuz. U.S. President Trump signaled a harder line toward Tehran, saying he would no longer be patient with Iran and calling on the country to strike a deal with Washington. The disruption to energy supplies is especially problematic for Europe, which is a net energy importer. Mining and technology stocks led the declines on Friday. Bank and real estate stocks also slumped. The benchmark index is on track to post a weekly loss. Final data from the statistics agency ISTAT released on Friday showed that the Italian annual inflation rate rose slightly less than initially estimated in April. Meanwhile, Eurozone government bond yields surged on Friday as rising oil prices intensified fears of resurgent inflation. Money markets are currently pricing in more than two rate hikes from the ECB, with the first expected in June. In corporate news, Syensqo (SYENS.BB) climbed over +5% after the Belgian chemicals company reported better-than-expected Q1 adjusted earnings.
Italy’s CPI data was released today.
The Italian April CPI rose +1.1% m/m and +2.7% y/y, weaker than expectations of +1.2% m/m and +2.8% y/y.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.02%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.99%.
China’s Shanghai Composite Index closed lower today as investors cautiously awaited the outcomes of the high-stakes two-day summit between U.S. President Donald Trump and Chinese leader Xi Jinping. Xi said the two sides have established a “new relationship” and mentioned “a lot of results.” Mr. Trump said his visit had been “incredible” and added, “I think a lot of good has come of it.” “We’ve made some fantastic trade deals for both countries,” the U.S. president said. Aviation stocks led the declines on Friday after Trump told Fox News Channel that China had agreed to buy 200 Boeing jets. At the same time, semiconductor stocks climbed after China’s leading contract chipmaker, Semiconductor Manufacturing International Corp., said on Friday that orders from overseas clients are rising as the global AI boom tightens capacity at foreign foundries. The benchmark index posted losses for the week. Meanwhile, the U.S. and China reached an “important consensus” on preserving stable economic and trade ties while broadening cooperation across various areas, according to a readout published by the official Xinhua News Agency. Neither side has released details of their commercial deals, which could be unveiled in the coming days. In corporate news, AI infrastructure provider Shenzhen Adtek Technology has filed for an initial public offering in Hong Kong, joining the wave of Chinese tech IPOs amid a global AI boom.
Japan’s Nikkei 225 Stock Index reversed earlier gains and closed lower today as investors took profits on high-flying tech shares heading into the weekend. The Nikkei initially climbed as much as 0.9%, buoyed by overnight gains on Wall Street, but then dropped sharply as chip stocks tumbled, signaling investor caution after a blistering rally. Losses in chemical and real estate stocks also weighed on the index. The benchmark index notched a weekly loss. Data from the Bank of Japan released on Friday showed that Japan’s monthly wholesale inflation jumped in April by the most in 12 years as the Middle East conflict drove up oil and chemical goods prices, strengthening the case for the central bank to raise interest rates as early as June. Meanwhile, Japanese government bond yields climbed across the curve on Friday, with several tenors hitting record highs as expectations grew for BOJ rate hikes amid mounting inflationary pressures. The BOJ said on Friday that Japan could face another wave of broad-based price increases around summer, as companies ranging from food producers to hot spring operators consider passing on surging energy costs from the Middle East conflict. The rise in JGB yields also reflects renewed worries about the nation’s fiscal policy following reports that the government is weighing a supplementary budget. Japanese Finance Minister Satsuki Katayama said on Friday that G7 finance chiefs are likely to discuss next week the recent volatility in global bond markets as sharp moves in Japan, the U.S., and Britain spill over into major markets. In corporate news, Honda Motor jumped over +8%, extending yesterday’s gains after the automaker pledged at least 800 billion yen ($5.1 billion) in shareholder returns over three years. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.13% to 29.71.
The Japanese April PPI rose +2.3% m/m and +4.9% y/y, stronger than expectations of +0.7% m/m and +3.0% y/y.
Pre-Market U.S. Stock Movers
Chip stocks sank in pre-market trading after U.S. Trade Representative Jamieson Greer said semiconductors were not a major focus during President Trump’s China summit. Marvell Technology (MRVL) and Intel (INTC) were down over -5%. Also, ON Semiconductor (ON) was down more than -3%. In addition, Advanced Micro Devices (AMD) was down over -2%.
Nvidia (NVDA) fell more than -2% in pre-market trading after U.S. Trade Representative Jamieson Greer said China will decide for itself whether to buy the company’s chips, adding that the country is “very committed to domestic production.”
U.S.-listed shares of Taiwan Semiconductor Manufacturing Co. (TSM) slid over -2% in pre-market trading after it announced plans to sell about 152 million shares of Vanguard International Semiconductor via a block trade to institutional investors.
Viking Holdings (VIK) dropped about -2% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight.
Figma (FIG) climbed over +8% in pre-market trading after the software company posted better-than-expected Q1 results and raised its full-year guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - May 15th
RBC Bearings (RBC), Americas Gold and Silver (USAS), Inhibrx Biosciences (INBX), Suncrete (RMIX), SharonAI Holdings (SHAZ), Bright Minds Biosciences (DRUG), ARS Pharmaceuticals (SPRY), Park Aerospace (PKE), Digi Power X (DGXX), Datavault AI (DVLT), BTQ Technologies (BTQ), Replimune Group (REPL), Presidio Production Company (FTW), A2Z Cust2Mate Solutions (AZ), Soluna Holdings (SLNH), Venu Holding (VENU), TuHURA Biosciences (HURA), Galectin Therapeutics (GALT), NeOnc Technologies Holdings (NTHI), Solana Company (HSDT), CitroTech (CITR), Microbot Medical (MBOT), MasterBeef Group (MB), comScore (SCOR).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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