US stock futures resumed their losing streak in Thursday’s trade, May 21, with key headline indices pointing to a weak start amid a rebound in crude oil prices, which triggered another spike in bond yields.
As Nvidia’s earnings failed to spark fresh momentum in the artificial intelligence trade, futures tied to the Nasdaq 100 fell 0.6%, while S&P 500 futures declined 0.4%. Futures linked to the Dow Jones Industrial Average were marginally higher by 0.3%.
After a sharp overnight decline, crude oil prices resumed their upward trend after Iran’s Supreme Leader said the country must retain its uranium, according to Reuters, tempering optimism that the warring sides were moving closer to a deal to reopen the Strait of Hormuz.
This came after Iran said it is reviewing the US’s new draft proposal in response to Tehran’s 14-point proposal and is yet to provide an official response, according to Tasnim.
In the previous session, all three major US indices ended with gains of over 1%, snapping their three-day losing streak, after US President Donald Trump said the US was in the “final stages” of negotiations with the Islamic Republic. However, the optimism faded following Iran’s latest remarks.
The back-and-forth over de-escalation hopes in the nearly three-month-long West Asia conflict has largely kept investor sentiment fragile. However, strong support from technology stocks has helped Wall Street scale record highs in recent months.
That rally has recently come under pressure as fears of potentially higher interest rates pushed US bond yields to multi-year highs.
The 10-year US Treasury yield rose more than 3 basis points to 4.607%, which set the tone for borrowing costs around the world. It rose along with oil prices and was last trading 3 basis points higher at 4.601%. The longer-dated 30-year Treasury bond yield, which is more sensitive to political risks, advanced over 2 basis points to 5.1334%.
Today’s rise in borrowing costs follows a sharp pullback during the previous session, which came after global bond yields touched multi-decade highs earlier this week on renewed inflation fears. The 10-year Treasury yield had touched a 16-month high of 4.7% on May 19.
At the same time, minutes from the Federal Reserve’s latest policy meeting showed that most officials believe a rate hike this year could still be warranted if inflation remains above the Fed’s 2% target.
Investors remain divided on whether the central bank will raise rates by December or keep borrowing costs unchanged through year-end.
Brokerage firm, Vested Finance, said the market is currently balancing two major forces simultaneously. On one hand, AI continues to drive strong earnings, investment inflows, and optimism around future growth. On the other hand, geopolitical tensions and elevated energy prices continue to pose risks to inflation and bond markets.
Crude oil rebounds as supply disruption fears resurface
Brent crude futures regained strength, rising $2.66 per barrel to the day’s high of $107.66, as fears resurfaced that supply disruptions could persist for longer. Meanwhile, WTI crude futures rebounded by $3 to $101 per barrel, partially recovering from the nearly 6% decline recorded over the previous two sessions.
Domestic brokerage firm Kotak Securities expects the near-term direction of crude oil prices to remain highly sensitive to geopolitical headlines, shipping flows through the Strait of Hormuz, and US inventory data. The brokerage said any diplomatic breakthrough could put further pressure on prices, while renewed supply disruptions may quickly revive bullish momentum across the crude complex.
US stocks in focus today
Nvidia shares were little changed in premarket trading, hovering around $223. Meanwhile, Intuit sank 13% after the software company said it plans to reduce its workforce by about 17%.
Meanwhile, Tesla advanced 1% after SpaceX, led by Elon Musk, publicly filed for an initial public offering.
IBM climbed 6.3% after The Wall Street Journal reported that the Trump administration was awarding $2 billion in grants to nine quantum-computing companies, of which IBM is expected to receive $1 billion.
GlobalFoundries rose 9.7%, while D-Wave Quantum jumped 19.3%. Rigetti Computing gained 14.6%, and Infleqtion advanced 26%, according to Reuters.
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