STRAIGHT FROM THE TRADING FLOOR
by Eric Criscuolo - Market Strategist
Published on 5/18/26 (a/o 1:15 pm)
DOW 49,596 (+70), S&P 500 7,389 (-19), Russell 2000 2,774 (-19), NYSE FANG+ 8,856 (+0), ICE Brent Crude $110.49/barrel (+$1.23), Gold $4,560/oz (-$2), Bitcoin ~76.6k (-2362)
- AI hardware weakness continues, but breadth better
- Iran headlines pick up post-China summit
- Nvidia, big retailers set to report this week
- Baseball strikes better than LIRR strikes
- Check out some of the recent ICE Data/Content:
- Inside the ICE House
- Episode 532: TGR Haas F1 Team Principal Ayao Komatsu on Toyota Partnership and F1 Growth
- ETF Central: Craft & Capital President Chris Sullivan
- NYSE Research Insights: Behind the Record Volumes: A Hidden Opportunity
- ICE Mortgage Monitor: April Home Prices Posted Strongest Monthly Gain in Nearly Two Years
- Market Story Lines
MAC Desk Commentary:
Last week ended on a sour note as angry traders prepared for a bad commute with the LIRR strike looming. Most major US indices fell >1% on Friday as global yields moved sharply higher. The S&P 500 was able to eke out a gain for the week though, making it seven in a row, but small and midcap indices fell >2%. It was a week full of hot inflation data, a continued surge in semis/memory (until Friday) and a focus on President Trump’s visit to China. Yields had held just below recent highs throughout the week but as the China meetings wrapped up markets started to get concerned that military operations in Iran could restart. That pushed oil higher and yields moved through key levels (2y>4.0%, 10y >4.50%) that equity markets could no longer brush off.
The Friday weakness carried through overnight as futures opened lower and were down ~1% at their nadir. They recouped those losses throughout the morning following several headlines out of Middle East outlets that pushed oil lower (US waving oil sanctions, Iran proposal for a multi-stage truce). The S&P 500 opened slightly higher but then pulled back as more Iranian headlines took a pessimistic turn- walking back the nuclear proposal, the oil sanctions relief and calling Iran’s new offer insufficient, with internal US discussions turning to next steps at the “highest level.”
Currently the S&P 500 is just under 7400, down 0.3%. Semis and memory weakness from Friday has continued NYSE Semis index - over 3%, DRAM memory ETF -5%) while software (IGV +1%) and the AI-disruption fears basket is higher (NOW, FICO, CRM, INTU +3-7%). Traders are also looking ahead to the big Nvidia earnings results Wednesday night. The AI weakness is masking improved market breadth, the deterioration of which was a growing area of concern that we discussed in our note on Friday. The equal-weight is higher and outperforming by ~0.5%, and the same with profitable small caps (S&P 600) but the Russell 2000 is lagging, down a little under 1% as several higher-risk areas get hit: neoclouds/data centers, AI optical equipment, crypto, quantum, rare earths all groups seeing many constituents down >5%. One exception is Space, as most names in that group trade at least marginally higher.
As noted Tech is lagging, and Utilities and Industries are also down ~0.5%. The Utilties weakness is mainly from NextEra’s 6% decline following confirmation of the monster deal to acquire Dominion Energy in an all-stock transaction totaling >$65B (in other Merger Monday news, Publicis agreed to buy Liveramp for just over $2B).
Industrials is seeing weakness from construction and electrical names as the AI trade stumbles, at least for today. All other sectors are flat to higher, with Energy leading on the commodities gains (nat gas names trading well in particular). Financials are strong as well, with banks up modestly and the AI-disruption/software names with strong gains (FDS, SPGI +4-6%), along with payments and insurance.
Global markets were mixed overnight showing some resiliency after the US selloff on Friday. G7 finance ministers will be meeting over the next two days, with Iran, oil and global rates obvious topics for discussion. Treasury Secretary Bessent said he would call on the rest of the G7 members to follow the US’ sanctions lead on Iran.
The Nikkei fell 1% but finished off its worst levels. JGB’s bear-steepened with 30 and 40y yields up ~5bp, shorter-end flat. Automakers got hit (Toyota, Honda down 4-6%). Memory chip maker Kioxia was an upside standout, rising 16%, as its next quarter operating profit guide is more than the company earned in its last fiscal year. Management said supply will remain tight throughout 2027.
An economic data dump out of China overnight was weak with retail sales, industrial production and FAI all missing estimates by a wide margin. The lone bright spot was unemployment which ticked down to 5.2% from 5.3%. The Hong Kong Hang Seng fell slightly more than 1% while the Shanghai Composite ended slightly in the red. Both indices ended off their lows, however. The Kospi was down >3% overnight but ended the session in the green as memory stocks bounced.
European equities opened lower but grinded higher throughout the session to close in the green. Germany’s DAX and the UK FTSE 100 rose >1%. Across the region utilities, energy, telecom and pockets of tech are outperforming while autos are under pressure.
The economic data flow is light today. The NY Fed Services Index (Business Leaders Survey) improved from last month and reached its highest level in over a year but remained in contraction. The expectations for Business Activity rose as well and are in a modestly expansionary reading. Prices Paid were about unchanged but price expectations rose.
The May NAHB Housing Index improved from April (from 34 to 37). Homebuilders are trading higher today. There will be some important earnings for the housing sector tomorrow, including Home Depot Eagle Materials and Toll Brothers.
Treasuries are trading in the middle of a relatively tight range today. Yields are flat to up 2bp across the curve, but continuing to creep further into levels that trigger concern for equities. The US Dollar Index is down around the day’s low, weakening against the British Pound in particular as gilt yields fell back and the pound staged a relief rally following last week’s decline, though political tensions remain firmly in place.
- US 2yr +1bps to 2Y%, 5yr +1bps to 5Y%, 10yr +0bps to 10Y%, 30yr +2bps to 30Y%
- USD index: -$0.26 to $98.95
Oil was down earlier on the first wave of optimistic headlines but the later, pessimistic headers have pushed crude just over 1% but off the highs. US natural gas is also up 3%. Precious metals turned lower as oil rose, currently around flat. Ag is seeing strong gains with wheat, corn and soy up 2-4% on news the White House and China agreed to an additional $17B of agricultural purchases through 2028. Adverse weather reports are also pushing prices higher. Crypto was under pressure over the weekend. Bitcoin tried to bounce earlier this morning after falling below $80k on Friday but never got any sustained upside momentum. The digital coin is down 3% to $~76.5k while Eth slips 5% and may test $2k again.
Earnings:
- After-Market: AGYS
- Pre-Market (Tues): AS, EXP, HD
- After-Market (Tues): CAVA, KEYS, TOL, XP
Economic Data:
US:
- NY Fed Services: -5.8 vs prior -14
- NAHB Housing Market Index: 37 vs 35 cons, prior 34
Global:
- China Retail Sales: 0.2% vs. 2% cons., prior 1.7%
- China Industrial Production: 4.1% vs. 5.9% cons, prior 5.7%
- China Unemployment: 5.2% vs. 5.3% cons, prior 5.4%
- China FAI: -1.6% vs. 1.6% cons., prior 1.7%
STRAIGHT FROM THE TRADING FLOOR
by Michael P. Reinking, CFA - Sr. Market Strategist
Published on 5/18/26 (a/o 9:00 am)
Good morning,
Last week ended on a sour note as angry traders prepared for a bad commute with the LIRR strike looming. Most major US indices fell >1% as global yields moved sharply higher. The S&P 500 was able to eke out a gain for the week, but small and midcap indices fell >2%. It was a week full of hot inflation data, a continued surge in semis/memory (until Friday) and a focus on President Trump’s visit to China. Yields had held just below recent highs throughout the week but as the China meetings wrapped up markets started to get concerned that military operations in Iran could restart, yields moved through key levels and equity markets could no longer ignore the situation.
Friday’s selloff carried through as futures re-opened yesterday but we have recouped those losses this morning following Iranian press reports suggesting that the US proposed waving oil sanctions. Oil prices reversed overnight gains and then have taken another leg lower after Al Arabayi, a Saudi television channel, reports that it has seen the amended Iran proposal which includes a multi-stage truce which would include a conditional transfer of uranium to Russia and Iran backed off of previous economic compensation demands. Oil prices traded as low as $107 after hitting $112 overnight. Yields have also backed off now down 1-2bps across the curve a little over 5bps off the highs.
Government Yields
Global markets were mixed overnight showing some resiliency after the US selloff. Global yields are pulling back modestly which is helping sentiment. G7 finance ministers will be meeting over the next two days, and this will surely be a topic of conversation. The economic data dump out of China was weak with retail sales, industrial production and FAI all missing estimates by a wide margin. The lone bright spot was unemployment which ticked down to 5.2% from 5.3%. The Hong Kong Hang Seng fell slightly more than 1% while the Shanghai Composite ended slightly lower, but both indices ended off the lows. The Kospi was down >3% overnight but ended the session in the green as memory stocks bounced. Indices in Europe also opened lower but have been grinding higher as we approach the bell. The DAX is outperforming up nearly 1%. Across the region utilities, energy, telecom and pockets of tech are outperforming while autos are under pressure across the region.
Oil prices are now down >1.5%. As oil price and the USD reverse so has the rest of the metals complex. Gold/silver are just starting to turn positive. Ag is moving higher up >2%. Crypto was under pressure over the weekend but has bounced modestly.
Little bit of a merger Monday with a monster deal in utilities as Nextera Energy announced it would acquire Dominion Energy in an all-stock transaction (>$65B). Publicis agreed buy Liveramp for just over $2B. UnitedHealth is down >3% after Berkshire cut its recently added stake. Delta and Macy’s are both higher as the firm disclosed new positions.
Earnings:
Pre-Market: BIDU, BRC
After-Market: AGYS
Economic Data:
US:
Last week ended on a sour note as angry traders prepared for a bad commute with the LIRR strike looming. Most major US indices fell >1% as global yields moved sharply higher. The S&P 500 was able to eke out a gain for the week, but small and midcap indices fell >2%. It was a week full of hot inflation data, a continued surge in semis/memory (until Friday) and a focus on President Trump’s visit to China. Yields had held just below recent highs throughout the week but as the China meetings wrapped up markets started to get concerned that military operations in Iran could restart, yields moved through key levels and equity markets could no longer ignore the situation.
Friday’s selloff carried through as futures re-opened yesterday but we have recouped those losses this morning following Iranian press reports suggesting that the US proposed waving oil sanctions. Oil prices reversed overnight gains and then have taken another leg lower after Al Arabayi, a Saudi television channel, reports that it has seen the amended Iran proposal which includes a multi-stage truce which would include a conditional transfer of uranium to Russia and Iran backed off of previous economic compensation demands. Oil prices traded as low as $107 after hitting $112 overnight. Yields have also backed off now down 1-2bps across the curve a little over 5bps off the highs.
Government Yields
- US 2yr +0bps to 4.06%, 5yr -1bps to 4.25%, 10yr -1bps to 4.59%, 30yr +1bps to 5.12%
- USD index: -$0.26 to $98.95
Global markets were mixed overnight showing some resiliency after the US selloff. Global yields are pulling back modestly which is helping sentiment. G7 finance ministers will be meeting over the next two days, and this will surely be a topic of conversation. The economic data dump out of China was weak with retail sales, industrial production and FAI all missing estimates by a wide margin. The lone bright spot was unemployment which ticked down to 5.2% from 5.3%. The Hong Kong Hang Seng fell slightly more than 1% while the Shanghai Composite ended slightly lower, but both indices ended off the lows. The Kospi was down >3% overnight but ended the session in the green as memory stocks bounced. Indices in Europe also opened lower but have been grinding higher as we approach the bell. The DAX is outperforming up nearly 1%. Across the region utilities, energy, telecom and pockets of tech are outperforming while autos are under pressure across the region.
Oil prices are now down >1.5%. As oil price and the USD reverse so has the rest of the metals complex. Gold/silver are just starting to turn positive. Ag is moving higher up >2%. Crypto was under pressure over the weekend but has bounced modestly.
Little bit of a merger Monday with a monster deal in utilities as Nextera Energy announced it would acquire Dominion Energy in an all-stock transaction (>$65B). Publicis agreed buy Liveramp for just over $2B. UnitedHealth is down >3% after Berkshire cut its recently added stake. Delta and Macy’s are both higher as the firm disclosed new positions.
Earnings:
Pre-Market: BIDU, BRC
After-Market: AGYS
Economic Data:
US:
- NY Fed Services: prior -14
- NAHB Housing Market Index
- China Retail Sales: 0.2% vs. 2% cons., prior 1.7%
- China Industrial Production: 4.1% vs. 5.9% cons, prior 5.7%
- China Unemployment: 5.2% vs. 5.3% cons, prior 5.4%
- China FAI: -1.6% vs. 1.6% cons., prior 1.7%
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