Nasdaq leads equity losses with oil, borrowing costs in focus

Published Tue, May 19, 2026 · 06:20 AM

[NEW YORK] The Nasdaq and the benchmark S&P 500 closed lower on Monday (May 18) as investors took some profits in technology stocks while surging Treasury yields and high oil prices fuelled concerns that inflation and borrowing costs could stay elevated.

The 10-year Treasury yield, the benchmark for global borrowing costs, climbed to its highest level since February 2025 earlier in the day on worries that high inflation would keep borrowing costs elevated due to the disruption of oil shipping through the Strait of Hormuz.

US crude settled up more than 3 per cent after a volatile session. But oil pared gains after settlement and US stocks trimmed losses after US President Donald Trump said he had paused a planned attack against Iran to allow for negotiations to take place on a deal to end the US-Israeli war with Iran, after Iran sent a new peace proposal to Washington. But he added the US was ready to resume attacks in the absence of a deal.

“It seems like the one issue that’s been moving markets on a day-to-day basis is oil prices. The main variable is the blockade on the Strait of Hormuz that pushes oil higher and increases the risk in the longer run of inflation expectations becoming unanchored,” said Burns McKinney, portfolio manager at NFJ Investment Group in Dallas, adding that high yields put pressure on long-duration sectors like the technology and “high-flying chip stocks.”

Equity investors seem “more optimistic and trusting of the president than bond investors,” according to McKinney, who said: “It seems like every other day there might be some rumor of a deal being struck in Iran and stocks rally again. They believe it and they kind of have the rug yanked out from under them because it just continues to be a stalemate.”

The Dow Jones Industrial Average rose 159.95 points, or 0.32 per cent, to 49,686.12, the S&P 500 lost 5.45 points, or 0.07 per cent, to 7,403.05 and the Nasdaq Composite lost 134.41 points, or 0.51 per cent, to 26,090.73.

Rally pause

This was the second straight decline for the Nasdaq and the S&P 500 as investors took a break from a rally that started in late March. The S&P had closed Thursday’s session up more than 18 per cent from its March 30 finish, which was its lowest close since the Iran war began in late February. In the same timeframe, the Nasdaq gained about 28 per cent as enthusiasm about artificial intelligence and solid technology earnings helped investors look past inflationary threats.

“There’s concern about the rally we’ve had in a short period of time, and there’s some profit-taking,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

The heavyweight information technology sector fell 0.97 per cent and led declines among the S&P 500’s 11 major industry sectors, with chip stocks among the biggest drags. The Philadelphia SE Semiconductor Index finished down 3.3 per cent. Energy was the biggest sector gainer, adding 1.8 per cent. Traders are pricing in a 36.7 per cent chance that the US Federal Reserve will raise interest rates by 25 basis points by year-end, according to CME’s FedWatch tool, after last week’s hotter-than-expected inflation readings.

Nvidia results in focus

The world’s most valuable company, Nvidia, is scheduled to report results on Wednesday. The chipmaker was the S&P 500’s biggest index-point drag on Monday, falling 1.3 per cent.

Expectations are high for the company, whose shares have risen sharply from a March low, while the Philadelphia SE Semiconductor Index has surged this year on strong demand for AI-related chips.

Walmart, the world’s largest retailer, is also due to report earnings this week, which could offer a clearer picture of how US consumers are coping with high energy prices and broader inflation. It rose 1.4 per cent on Monday.

Dominion Energy shares jumped 9.4 per cent after power firm NextEra Energy said it would buy the utility in an all-stock deal valued at about US$66.8 billion. NextEra’s shares fell 4.6 per cent. Shares of Regeneron tumbled 9.8 per cent as the drugmaker’s experimental treatment missed the main goal in a late-stage trial in patients with advanced melanoma, a type of skin cancer.

Advancing issues outnumbered decliners by a 1.09-to-1 ratio on the NYSE, where there were 167 new highs and 152 new lows. On the Nasdaq, 2,238 stocks rose and 2,637 fell as declining issues outnumbered advancers by a 1.18-to-1 ratio. The S&P 500 posted 21 new 52-week highs and 13 new lows.

On US exchanges, 20.86 billion shares changed hands compared with the 18.36 billion average for the last 20 sessions. REUTERS