It's one of those days where good news just isn't good enough. U.S. stocks edged lower at midday Thursday as Treasury yields rebounded and crude oil climbed back above $100 a barrel, with optimism over an imminent U.S.-Iran agreement fading after Tehran hardened its position on uranium.
Nvidia's blockbuster earnings beat — we're talking $81.6 billion in revenue, up 85% year-over-year — failed to extend the AI rally. The world's largest company fell 1.6%. Sometimes the bar is just too high.
According to Reuters, Iran's Supreme Leader issued a directive stating Tehran's near-weapons-grade uranium should not be sent abroad, hardening Iran's position on a key U.S. demand in peace talks. That sent WTI crude oil climbing 1.9% to $100.08 a barrel by midday, retaking the triple-digit threshold as doubts over Strait of Hormuz traffic and Iran's tougher uranium stance reignited the war risk premium. Brent crude rose 1.4% to $106.45.
The macro backdrop got a bit more complicated. The U.S. 10-year Treasury yield rebounded to 4.61%, up 2 basis points on the day, while the policy-sensitive 2-year yield climbed 4 basis points to 4.11%. The 30-year held above 5% at 5.13%. The dollar index rose to 99.4, hitting an April high as the rate differential widened back in the greenback's favor. And reinforcing the macro backdrop, the S&P Global U.S. Manufacturing PMI jumped to 55.3 in May – the strongest reading since 2022.
Across U.S. equity markets by midday Thursday, losses were broad but contained, with rate-sensitive growth names taking the hardest hit while small caps clung to the green.
The S&P 500 fell 0.3% to 7,414, while the Dow Jones Industrial Average dipped just 65 points to 49,944, cushioned by an 8% surge in International Business Machines Corp. (IBM) after winning a $1 billion CHIPS Act quantum-computing award. The Dow's biggest drags were Walmart Inc. (WMT), down 7.6% on earnings, and Salesforce Inc. (CRM), off 4.3%.
The tech-heavy Nasdaq 100 slid 0.6% to 29,111 as Nvidia's record-setting print failed to lift the broader complex. The Russell 2000 small-cap index was the lone gainer, eking out a fraction to 2,819, as domestically focused names shrugged off the yield bump.
