The S&P 500 Index ($SPX) (SPY) on Thursday closed up +0.17%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.55%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.20%. June E-mini S&P futures (ESM26) rose +0.18%, and June E-mini Nasdaq futures (NQM26) rose +0.20%.
Stock indexes recovered from early losses on Thursday and settled higher, with the Dow Jones Industrial Average posting a 3.25-month high. Hopes for a diplomatic resolution to the US-Iran war that would reopen the Strait of Hormuz sparked a reversal in crude oil prices, sending them sharply lower after rising sharply, which pushed stocks higher. The Dow Jones Industrials found support on the +12% jump in IBM following reports that the company is receiving a $1 billion grant from the US government to take a stake in its quantum-computing business.
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Stocks initially moved lower on Thursday on concerns that a prolonged closure of the Strait of Hormuz could worsen energy disruptions and fuel inflation. Crude prices jumped more than +2% early on Thursday after Reuters reported that Iran's Supreme Leader said enriched uranium must stay in Iran, as sending the material abroad would leave the country more vulnerable to future attacks by the US and Israel. The report tempers optimism that the US and Iran were moving closer to a deal to end the war. The markets are awaiting Iran’s official response to the latest US proposals to reopen the Strait.
Nvidia’s earnings results, released after Wednesday’s close, were better-than-expected, although some analysts questioned the sustainability of growth, especially amid higher competition. Nvidia closed down more than -1%.
Stock indexes found support on Thursday’s economic news, which showed signs of stability in the labor market and strength in manufacturing and housing activity. On the negative side, the May Philadelphia Fed business outlook survey fell more than expected to a 5-month low.
US weekly initial unemployment claims fell -3,000 to 209,000, close to expectations of 210,000.
US Apr housing starts fell -2.8% m/m to 1.465 million, a smaller decline than expectations of 1.410 million. Apr building permits, a proxy for future construction, rose +5.8% m/m to 1.442 million, stronger than expectations of 1.384 million.
The US May Philadelphia Fed business outlook survey fell -27.1 to a 5-month low of -0.4, weaker than expectations of 17.8.
The US May S&P manufacturing PMI unexpectedly rose +0.8 to 55.3, stronger than expectations of a decline to 53.8 and the strongest pace of expansion in 4 years.
Chicago Fed President Austan Goolsbee said the employment side of the Fed's dual mandate is "mostly stable," but "right now we have a pretty significant inflation problem developing."
WTI crude oil prices (CLM26) remain extremely volatile and are susceptible to headlines from the Iran war. Prices fell more than -1% on Thursday after initially rallying more than +2%. Crude prices retreated after Iran said the latest US proposal has "narrowed the gaps" between the two sides. That proposal suggested a short-term deal that would see Iran open the Strait of Hormuz and the US lift a blockade of Iranian ports, with both sides then going into deeper negotiations over Iran's nuclear program. Also, Secretary of State Rubio noted “some good signs” that a deal could be reached. 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 1% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.
Earnings season is winding down, and reports thus far have been supportive of stocks. As of Thursday, 83% of the 470 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.
Overseas stock markets settled mixed on Thursday. The Euro Stoxx 50 fell from a 2-week high and closed down -0.26%. China's Shanghai Composite fell to a 3-week low and closed down -2.04%. Japan's Nikkei Stock Average closed up sharply by +3.14%.
Interest Rates
June 10-year T-notes (ZNM6) on Thursday closed down -5.5 ticks. The 10-year T-note yield rose +0.8 bp to 4.576%. T-note prices were under pressure from Thursday’s stronger-than-expected US economic reports on housing starts, building permits, and manufacturing activity. Also, hawkish comments from Chicago Fed President Austan Goolsbee weighed on T-notes when he said he was worried about inflation.
T-notes recovered from their worst level after WTI crude oil erased an early rally and fell sharply, which lowered inflation expectations. The 10-year breakeven inflation rate fell to a 2-week low of 2.419% on Thursday. T-notes also garnered some support after the May Philadelphia Fed business outlook survey fell more than expected to a 5-month low.
European government bond yields are mixed today. The 10-year German Bund yield rose +0.2 bp to 3.098%. The 10-year UK gilt yield fell to a 1.5-week low of 4.940% and finished down -2.2 bp to 4.965%.
The Eurozone May S&P manufacturing PMI fell -0.8 to 51.4, weaker than expectations of 51.8. The Eurozone May S&P composite PMI fell -1.3 to 47.5, weaker than expectations of no change at 48.8 and the steepest pace of contraction in 2.5 years.
The Eurozone May consumer confidence index rose +1.6 to -19.0, stronger than expectations of no change at -20.6.
The European Commission forecast that 2026 Eurozone GDP will weaken to +0.9% from +1.4% in 2025, while 2026 Eurozone CPI will strengthen to +3.0% from +2.1% in 2025.
The UK May S&P manufacturing PMI was unchanged at 53.7, stronger than expectations of a decline to 53.0.
Swaps are discounting an 87% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.
US Stock Movers
AI-infrastructure stocks rallied on Thursday. ARM Holdings Plc (ARM) closed up more than +16% to lead gainers in the Nasdaq 100, and Sandisk (SNDK) closed up more than +10%. Also, Seagate Technology Holdings Plc (STX) closed up more than +7%, and Western Digital (WDC) and Qualcomm (QCOM) closed up more than +5%. In addition, Micron Technology (MU) closed up more than +4%, Lam Research (LRCX) closed up more than +3%, and Marvell Technology (MRVL) closed up more than +2%.
Airline stocks and cruise line operators moved higher as WTI crude oil prices erased an early rally and fell more than -1%, lowering fuel costs and boosting profitability prospects. American Airlines Group (AAL) closed up more than +4%, and Alaska Air Group (ALK) and Norwegian Cruise Line Holdings (NCLH) closed up more than +3%. Also, Delta Air Lines (DAL), Southwest Airlines (LUV), and Norwegian Cruise Line Holdings (NCLH) closed up more than +2%. In addition, United Airlines Holdings (UAL) closed up more than +1%.
Chipmakers slid on Thursday, weighing on the broader market. Microchip Technology (MCHP), Analog Devices (ADI), and NXP Semiconductors NV (NXPI) closed down more than -3%, and Texas Instruments (TXN) closed down more than -2%. Also, Nvidia (NVDA) closed down more than -1%.
Rigetti Computing (RGTI) closed up more than +30% after signing a letter of intent with the US Department of Commerce for an award of up to $100 million in funding over three years to accelerate superconducting quantum computing research and development.
Applied Digital (APLD) closed up more than +21% after signing a 15-year lease valued at about $7.5 billion with a US investment-grade hyperscaler for its Polaris Forge 3 campus.
Nebius Group NV (NBIS) closed up more than +14% after partnering with Bloom Energy to deploy fuel-cell technology to power its AI-infrastructure build-out in the US.
Ralph Lauren (RL) closed up more than +13% to lead gainers in the S&P 500 after reporting Q4 net revenue of $2.0 billion, above the consensus of $1.85 billion.
International Business Machines (IBM) closed up more than +12% to lead gainers in the Dow Jones Industrials after the Wall Street Journal reported the company is receiving a $1 billion grant from the US government for a stake in its quantum-computing business.
EnerSys (ENS) closed up more than +11% after reporting Q4 net sales of $988 million, better than the consensus of $974 million.
Elf Beauty (ELF) closed up more than +5% after reporting Q4 net sales of $449.3 million, stronger than the consensus of $423.1 million.
Intuit (INTU) closed down more than -20% to lead losers in the S&P 500 and Nasdaq 100 after reporting Q3 product and other revenue of $799 million, well below the consensus of $920.5 million.
Walmart (WMT) closed down more than -7% to lead losers in the Dow Jones Industrials after forecasting Q2 adjusted EPS of 72 cents to 74 cents, weaker than the consensus of 75 cents.
Deere & Co (DE) closed down more than -4% after forecasting full-year net income of $4.5 billion to $5.0 billion, the midpoint below the consensus of $4.79 billion.
Kroger (KR) closed down more than -2% after CEO Foran said the company is considering significant price cuts to win back market share.
Earnings Reports(5/22/2026)
BJ's Wholesale Club Holdings Inc (BJ), Booz Allen Hamilton Holding Co (BAH), BRT Apartments Corp (BRT), Edgewise Therapeutics Inc (EWTX), ePlus Inc (PLUS), Hub Group Inc (HUBG), Nano-X Imaging Ltd (NNOX), Replimune Group Inc (REPL), XCF Global Inc (SAFX).
On the date of publication, Rich Asplund 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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