Rising Oil, Lack of War Progress Sends Stocks Lower

Published as of: May 11, 2026, 9:13 a.m. ET

(Monday market open) The rally paused early Monday after six straight weeks of gains. Though major indexes didn't stumble much, the Persian Gulf impasse shows no signs of ending after the U.S. rejected Iran's terms late Sunday. Crude oil rose 3% to near $100 per barrel in the U.S., where gas now averages $4.50 per gallon heading into key inflation reports data. This week also includes President Trump's trip to China to talk with President Xi, where technology and rare earths could be among the topics.

Considering all the record highs despite lack of progress toward peace, lofty oil, and signs of concentration in tech, it's tough to say whether the market has grown complacent. "The global economy is experiencing the largest CapEx boom in history, and earnings estimates continue to be revised higher," said Nathan Peterson director of derivatives research and strategy at the Schwab Center for Financial Research (SCFR) in his Weekly Trader's Outlook. "The bullish momentum can persist longer than most investors think, and as long as dip buyers get rewarded with higher prices, it can reinforce the dip buying behavior."

Back on Friday, stocks rose after April jobs gains almost doubled expectations at 115,000 and unemployment stayed at 4.3%. Even so, the tech-heavy Nasdaq Composite's gains doubled those of the broader S&P 500 Index. For the week, the Nasdaq's 4.5% gain compared with 2.3% for the S&P 500. "The driving engine behind last week's push higher in stocks continued to be the AI infrastructure plays, especially in the chip stocks," Peterson said, noting that Advanced Micro Devices' (AMD) upward revision for long-term growth helped fuel bullish momentum in the semiconductor space.

1. On the block: Several Treasury auctions this week could affect yields, starting with a 3-year note auction this morning and a 10-year note one tomorrow. Results are usually available before the close of trading on Wall Street. Recent auctions saw lax demand, and more of the same could send yields higher. That, in turn, could pressure rate-sensitive small-cap stocks and home builders. Crude also remains a big driver for yields. Higher oil generally has sent yields up, and vice versa. Still, the benchmark 10-year Treasury note yield has traded in a tight range between roughly 4.2% and 4.45% for eight weeks now, which it stayed in this morning despite the oil move. "We're not expecting them to go significantly higher from here," said Collin Martin, head of fixed income research and strategy at SCFR. "We don't really expect them to retest the 5% level we saw with the 10-year back in 2023."
    
2. Earnings pace slows after impressive start: First quarter S&P 500 earnings per share growth is nearly 28% on a blended basis—meaning combined growth for companies reporting already and estimates for those to come—FactSet said Friday. Most of the mega-cap tech firms boosting that number have already reported, though Nvidia (NVDA) looms on May 20. Retailer earnings dominate later this month, and their lower margins may reduce the overall figure. Still, many analysts now look for stronger earnings growth in coming quarters, piggybacking off first quarter strength. Analysts now expect nearly 20% annual second quarter S&P 500 earnings growth. AI and tech companies have dominated in terms of positive revisions to earnings growth, not just for the first quarter, but for the full calendar year. However, there's concentration concern as three companies alone—Amazon (AMZN), Alphabet (GOOGL), and Meta Platforms (META)—explain about 70% in dollar terms the increased earnings expectation for the entire year. The concentration risk also shows up in market breadth, as only 52% of S&P 500 stocks traded above their 50-day moving averages as of Friday. Tech did most of the heavy lifting.
    
3. Jobs report brings 1960's nostalgia: Last Friday's jobs report showed Federal government positions falling to the lowest point since May 1966, the month when the Beatles released a song about a man who wanted to be a "Paperback Writer." That particular job category isn't tracked by nonfarm payrolls. Wages aren't going back to 1966 levels, but at growth of just 0.2% in both March and April, recent weakness in pay could ease inflation concerns. Job categories with the most growth, including retail and healthcare, aren't traditionally high paying. There was almost no change in business and professional, financial activities, or construction growth last month—categories that tend to pay more. "Friday's payrolls report surprised to the upside which bolsters the case that the labor market is showing signs of stabilization," said Cooper Howard, director of fixed income research and strategy at SCFR. Longer-term interest rates could remain elevated, he added, due to the stabilizing jobs market and inflation, and the Federal Reserve seems likely to stay on hold despite the expected Senate approval this week of chairman nominee Kevin Warsh, who's advocated for lower rates.

Moderna (MRNA) surged 8% early today after news reports of a U.S. case of hantavirus. The company has a hantavirus treatment in early development, according to media reports. The stock is up more than 160% over the last six months.

Lumentum (LITE) added 5.5% after it announced its shares will now be part of the Nasdaq-100^®. The company is a global leader in optical and photonic technologies behind AI and cloud infrastructure. Shares are up 57% over the last three months.

Circle Internet Group (CRCL) rose 4% despite quarterly revenue slightly missing expectations. Earnings per share topped analysts' consensus. The positive move today came after Circle announced it had raised $222 million in an ARC Token presale. This is a method through which early stage blockchain projects can raise money, CNBC noted.

Energy stocks climbed early Monday on strength in the oil market. Some shares up 1% or more included Halliburton (HAL), Exxon Mobil (XOM), and Conoco Phillips (COP).

Intel (INTC) had another double-digit gain of almost 14% Friday and climbed another 5% this morning after The Wall Street Journal reported that Intel will build chips for Apple (AAPL). Details of the exact type of chip and Apple products involved weren't immediately available. Shares of Intel have tripled since late March. Taiwan Semiconductor Manufacturing (TSM), the largest chip builder, fell 2% this morning.

The PHLX Semiconductor Index (SOX) rose 5.5% Friday and is up about 64% from late March, driven by huge gains for Intel, Micron (MU), and Advanced Micro Devices, which last week revised long-term growth expectations higher and helped fuel bullish chip momentum. SanDisk (SNDK) rose nearly 17% Friday despite no sign of big news. Qualcomm (QCOM) and Micron carried on the rally this morning, up 9% and 5%, respectively.

Rocket Labs (RKLB) soared 34% Friday after the space company's first quarter revenue topped estimates and the company announced new deals, CNBC reported.

The S&P 500 Index's Relative Strength Index (RSI) finished the old week at nearly 74, with 70 traditionally considered "overbought." The move above 70 isn't a major concern. It would be more concerning if RSI dropped below that level now, something investors might want to watch for clues on where the SPX might head.

Checking below the surface, last week saw call buying in the options market reach sky-high levels for tech companies, possibly a warning sign of "fear of missing out," or FOMO getting the best of many participants. It might be interesting to see if more downside hedges get taken this week, especially in the AI space where overcrowding remains a risk.

For tomorrow's April Consumer Price Index (CPI), the Briefing.com consensus is 0.6% for headline CPI and 0.4% for core, which excludes energy and food. That compares with March growth of 0.9% and 0.2%, respectively. Core might get more attention, with investors focused on whether high oil prices are leaking into other products.

Back when investors were rotating out of tech and into other sectors earlier this year, the S&P 500 Equal Weight Index (SPXEW—purple line), which weighs all components the same, outdueled the market-cap weighted S&P 500 Index (SPX—candlesticks). That changed early this month, as year-to-date SPX gains moved above 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 getting left behind.