Yields, Oil Surge, Putting Early Pressure on Tech

Published as of: May 15, 2026, 9:12 a.m. ET

(Friday market open) Stocks stumbled early, hurt by sudden pressure on the high-flying tech sector as crude oil and yields climbed. Alarmingly, the 10-year Treasury note yield spiked nine basis points to 4.55%, the highest in a year, indicating rising concerns about war-related inflation leading to possible rate hikes. The early moves could partly reflect disappointment over lack of Iran progress coming out of President Trump's meetings with Chinese President Xi and worries the conflict might resume with the China trip over.

The welcome wagon hasn't rolled up yet for Kevin Warsh as he prepares to take over the Federal Reserve when Chairman Jerome Powell's term ends today. Two ugly inflation prints this week sent chances of a rate cut to zero in futures trading, and today's yield rise didn't do him any favors, either. "Fed rate hikes are now being priced in, rather than cuts," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). That's the opposite of what Warsh wants, judging from his remarks, but "it will be very difficult for him to argue for lower rates when inflation has reaccelerated," Martin said.

All major indexes rose Thursday, including the first-ever close above 7,500 for the S&P 500 Index. Volatility eased, and the Dow Jones Industrial Average reclaimed 50,000. Leadership is still narrow beneath the surface, however. That means a relatively small group of stocks continues to do much of the heavy lifting. Narrow rallies can persist, but they also tend to leave the market more vulnerable if leadership begins to fade.

Sector watch: Back when investors were rotating out of tech earlier this year, the S&P 500 Equal Weight Index (SPXEW), which weighs all components the same, outdueled the market-cap weighted S&P 500 Index. That changed early this month, as year-to-date SPX gains moved above those of the SPXEW in a sign that mega caps are fueling the current rally. Chip and AI-related names have a lot more impact on the cap-weighted S&P 500, but investors might want to keep an eye on the equal weight index for signs that the rest of the market could be left behind. Sectors to watch for possible influence include heavily weighted financials and industrials, both cyclicals that often do better in a growing economy. Each has trailed the leaders dramatically over the last month, suggesting any pause in the chip rally could take a heavy toll. Still, the backdrop remains supportive, with resilient consumers, strong earnings, and optimism around AI helping markets. That said, sticky inflation, higher yields, and narrow leadership suggest investors should expect a more selective market from here.

Labor force keeps shrinking: April unemployment stayed at 4.3% even as jobs growth topped 100,000. Why didn't the rate fall? Normally, it might reflect more people re-entering the workforce and describing themselves as unemployed. However, labor market participation fell last month by 0.1% to 61.8%. Lower participation can mean more people giving up seeking work, a sign of economic slowing. "The total number of individuals in the labor force dipped again in April and has been rolling over since November," noted Kevin Gordon, head of macro research and strategy at SCFR. The U6 measure—which measures all people unemployed plus people employed part time or marginally attached to the labor force—rose to a seasonally adjusted 8.2% in April from 8% in March and 7.3% a year earlier. Retail sales showed the consumer holding up in the current job and inflation climate, though spending is turning selective as households focus more on essentials and value. For markets, that points to an economy that's still growing, though perhaps at a more measured and uneven pace.

Powell's Fed chairman legacy: As Powell clears his desk at the Fed chairman's office and prepares to return to being "just" a Fed governor, he's among the most popular representatives of the current Trump administration. Powell's steady support for Fed independence, which he called "part of the absolute foundation of this amazing economy that we have," may have made him some enemies, but also appeared to resonate with the public. By late 2025, he enjoyed a 44% Gallup approval rating, the highest of any U.S. leader. While he said he won't leave the Fed until he thinks any remaining criminal investigation into him is "well and truly over," Powell pledged to keep a low profile now that he's a board member rather than chairman. Asked by a reporter at last month's post-Federal Open Market Committee (FOMC) press conference how he planned to lower his profile, Powell responded not with words but by physically lowering himself at the podium, drawing a laugh from the assembled media.

• Applied Materials (AMAT), a semiconductor equipment maker, sank 1.6% early Friday despite earnings, revenue, and guidance all topping analysts' estimates. General pressure in the tech sector appeared to hurt shares.
   
• ServiceNow (NOW) rose 2.3% early and other software stocks also climbed ahead of a busy schedule of earnings for the software group in coming weeks.
   
• Chip and AI-related stocks took the other route early Friday, descending ahead of the open after weeks of gains. Some of the names taking a tumble included Marvell Technology (MRVL) off 5%, Intel (INTC) down 4.7%, Arm Holdings (ARM) off 4%, and ASML (ASML) down 4%. There's no major sector-related news driving these and other names lower this morning. Instead it appears caution and risk-off trading ahead of the weekend amid uncertainty over yields and oil account for the selling.
   
• Nvidia (NVDA) sank 2% early ahead of earnings next Wednesday and following record highs yesterday. Hopes for sales of its less advanced chips to China got a boost yesterday when Reuters reported the U.S. had cleared sales to 10 Chinese firms, but President Trump told reporters today that the topic of Nvidia's chips didn't arise in his conversations with President Xi.
   
• As of early today, chances of a Fed rate hike sometime this year climbed to 45%, according to the CME FedWatch Tool, with the highest odds of a single hike to 3.75% to 4%. Just a month ago, chances of a hike in 2026 were 1%, but the failure to solve the conflict or bring down oil prices has investors concerned inflation might remain a feature.
   
• Metals prices backtracked early as the price of oil rose, with copper falling 4.2%, gold down 2.7%, and silver down nearly 8%. This hurt shares of mining firms in the early going.
   
• In data today, the Empire State Manufacturing Index for May leaped to 19.6 from 11.0 in April. Analysts had expected just 6.2, according to Briefing.com.
   
• Cerebras (CBRS) climbed 68% Thursday as AI-enthusiasts piled into the AI company on its first day of trading, closing in on $100 billion in valuation for a company with a little more than $500 million in 2025 revenue. The company is what CNBC called "the biggest pureplay AI IPO to hit Wall Street" and the first notable tech company IPO in a few months.
   
• Boeing (BA) sank more than 4% Thursday despite President Trump telling Fox News that China will buy 200 Boeing jets. Analysts had expected a larger order, CNBC reported.
   
• Crypto-linked stocks Coinbase (COIN) and Strategy (MSTR) both rose 5% yesterday after Reuters reported that a Senate committee advanced legislation known as the Clarity Act that would create regulations for cryptocurrencies. The bill now goes to the full Senate.
   
• Checking the technical picture, the S&P 500 Index has pushed into a resistance area in the range of 7,450 to 7,500, while support sits near 7,030. With only about half of stocks above their 50-day moving average, the rally remains somewhat narrow. In practical terms, this suggests the market can continue to grind higher, but upside may become more selective unless participation broadens across more sectors and stocks.
   
• Volatility surged 10% this morning as the Cboe Volatility Index (VIX) topped 19. Traditionally, 20 has been a key level to watch indicating heightened uncertainty.

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Over the last year, the PHLX Semiconductor Index (SOX—candlesticks) is up 143% and the S&P 500 Equal Weight Index (SPXEW—blue line) is up just 15%. Meanwhile, the SOX now trades 32% above its 50-day moving average of 9,119 (red line). Traditionally, these premiums to the broader market and its own 50-day moving average are among the widest in history and suggest consolidation may loom at some point. 

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

May 18: Expected earnings from Baidu (BIDU).
May 19: Expected earnings from Home Depot (HD), Toll Brothers (TOL), and Cava Group (CAVA), and April housing starts and building permits.
May 20: FOMC minutes and expected earnings from Nvidia (NVDA), Analog Devices (ADI), TJX Companies (TJX), Lowe's (LOW), Williams-Sonoma (WSM) and Intuit (INTU).
May 21: Expected earnings from Walmart (WMT), Deere (DE), Ralph Lauren (RL), Ross Stores (ROST), Zoom (ZM), and Decker's Outdoor (DECK).
May 22: Final May University of Michigan Consumer Sentiment.