NEW YORK, May 18, 2026, 17:58 EDT
Stocks in the U.S. ended Monday on a mixed note, with the Dow finishing up, but the S&P 500 and Nasdaq closing lower as tech stocks slipped. Oil prices rose after President Donald Trump said he stopped a planned strike on Iran, and investors tried to size up the chances of diplomacy versus fresh supply risks.
Oil is no longer the only issue. With crude prices rising, inflation could stay sticky, and higher bond yields are pushing up borrowing costs for households, companies, and governments as investors demand more to hold government debt.
10-year U.S. Treasury yields hit 4.631% on Monday, a level last seen in February 2025, according to Reuters. That benchmark affects mortgages and corporate lending. “Until something breaks,” yields could keep rising, said Jack McIntyre, portfolio manager at Brandywine Global Investment Management. Reuters
Trump said the U.S. isn’t going ahead with what he called a scheduled attack on Iran on Tuesday, but said he’s told the military to prepare for a “full, large scale assault” if there isn’t an acceptable agreement. Reuters reported it had not seen any earlier announcement about such an attack, and could not confirm if there were strike preparations. Reuters
Iran’s new offer, passed via Pakistan, is aimed at stopping the fighting, reopening the Strait of Hormuz and removing shipping sanctions, Reuters said, citing a senior Iranian source. The waterway is a key route for oil and gas; prices often spike when traders think the strait will stay closed.
U.S. crude closed at $108.66 a barrel. Brent, the main global benchmark, settled at $112.10. The U.S. Energy Information Administration projected in its May outlook that with the Strait of Hormuz staying effectively shut until late May, global oil inventories would drop steeply in the second quarter. Brent should hold close to $106 for May and June, according to the EIA.
Stocks got hit as bonds sold off. Higher yields raise borrowing costs and weigh on expensive growth shares, especially AI names that had seen a lot of bullish bets ahead of Nvidia’s results this week.
Heavy selling hit AI hardware stocks like Sandisk and Bloom Energy, Investor’s Business Daily said. Software names held up better. Nvidia is still key for the AI trade. Its results are expected to show if chip and data center spending keeps backing up the sector’s move.
Chip stocks faced more jitters. Oliver Pursche, senior vice president and adviser at Wealthspire Advisors, said Trump’s trip to China “left a lot of open questions” about Taiwan. With Taiwan’s critical role in chip making, he said, the geopolitical risk is something semiconductor investors can’t shrug off. Reuters
Late in the day, oil backed off its highs, according to Barron’s. Brent almost hit $113 after Trump’s announcement, then pulled back. Still, prices stayed up enough to lift energy stocks and weigh on rate-sensitive names.
If talks break down or the ceasefire unravels, oil, gasoline and freight costs could jump if the U.S. strikes again, if there are more attacks near Gulf energy sites, or if the Hormuz Strait stays closed longer. That could push investors to start pricing in tighter conditions and a softer consumer.
Markets are holding a shaky truce, not a full peace. Investors are waiting on retail numbers, Nvidia’s results and news from Washington and Tehran before they can tell if Monday’s mixed finish is just a break or if another drop is coming.
