Stocks Slide as Bond Yields Rise, Oil and Gold Surge

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Index Update: Investor sentiment was dampened as President Trump struggled to gain support for a major tax-cut bill. Earnings season showed mixed results, with Lowe’s shares rising after beating profit expectations and reaffirming guidance, while Target gained despite missing estimates and lowering its outlook. Megacap tech stocks were mixed, with several major names trading lower and others near flat.

Market Movers: On Tuesday, the top gainers were Intellicheck, Inc (+17.82%), followed by OnKure Therapeutics, Inc (+10.91%). On the contrary Tourmaline Bio, Inc (-9.8%) and Cytek Biosciences, Inc (-9.29%) declined the most the same day.

Commodities Update: WTI and Brent crude oil futures surged above $63 and $66 per barrel, respectively, amid reports that Israel may strike Iranian nuclear sites. The potential attack has heightened fears of supply disruptions in the Middle East, especially with concerns that Iran could retaliate by closing the vital Strait of Hormuz. These tensions are compounded by uncertainties around US-Russia ceasefire talks over the Ukraine conflict. However, US crude oil inventories rose unexpectedly, easing some supply worries. Gold prices climbed to around $3,300, nearing a two-week high, supported by escalating geopolitical risks and a weaker US dollar. The potential Middle East conflict escalation and cautious economic outlook from the Federal Reserve, along with a US credit rating downgrade and tariff uncertainties, have increased demand for gold as a safe haven. Additionally, the softer dollar has made gold more attractive to international buyers.

Macro Update: U.S. mortgage applications fell 5.1% for the week ending May 16, marking the steepest decline in a month, as rising mortgage rates near 7% dampened demand. Both home purchase and refinance applications dropped by 5%, driven by inflation concerns and higher Treasury yields.

Futures Update: U.S. stock index futures declined, indicating a continuation of the previous session's losses as concerns about the U.S. economy and trade tariffs persisted. Major indexes on Wall Street had retreated, with stocks under pressure from rising 10-year Treasury yields, which peaked before settling lower. The S&P 500 ended a six-session winning streak, led by a decline in technology shares following recent gains.

Following an early slump that ended the previous session on a higher note, stocks retraced their gains during Tuesday's trading. The S&P 500 fell by 23.14 points, or 0.39%, closing at 5,940.45. Technical analysis shows that the current price resides within a confluence zone that previously acted as resistance, indicating a potential period of consolidation in the near term, as highlighted in prior commentary. Nonetheless, the upcoming golden cross of key moving averages suggests a possible shift toward a more bullish trend, which is expected to serve as a support level in the near future. Support is anticipated around 5,777, with resistance near 5,977.