U.S. equities ended lower on Thursday, pulled down by a sharp rise in crude oil prices and a jump in Treasury yields that reignited inflation concerns. The S&P 500 fell 0.42% to 7,401.48, the Nasdaq Composite lost 0.57% to 26,119.48, and the Dow Jones Industrial Average declined 0.26% to 49,879.20, according to LSEG data.
Brent crude surged 2.57% to $107.72 a barrel, while the 10-year Treasury yield climbed to 4.637%. The move higher in oil was driven by geopolitical tensions after Iran’s Supreme Leader Ayatollah Mojtaba Khamenei reportedly instructed officials not to export near-weapons-grade uranium, dashing hopes for a breakthrough in U.S.-Iran talks and refocusing attention on shipping risks at the Strait of Hormuz. Rising energy costs and higher bond yields create a challenging environment for stocks, as they increase input costs for companies and households while making high-priced equities less attractive relative to fixed-income alternatives.
Nvidia’s Record Revenue Fails to Lift Tech
Nvidia (NVDA) reported robust first-quarter results, with revenue hitting a record $81.6 billion, up 85% year-over-year, and guidance for second-quarter revenue of approximately $91 billion. The board also authorized an additional $80 billion in share buybacks. CEO Jensen Huang stated that the AI buildout is “accelerating at extraordinary speed.” However, the market reaction was muted, with Nvidia shares slipping about 1.6% to $219.96 in late morning trading. Analysts pointed to growing competition from large tech clients and rivals such as Intel (INTC) and Advanced Micro Devices (AMD) as factors tempering enthusiasm.
Other megacap tech stocks showed mixed performance: Microsoft (MSFT) lost ground, while Apple (AAPL) edged higher, failing to provide a broad lift to the sector.
Walmart’s Cautious Outlook Hits Retail
Retail stocks came under pressure after Walmart (WMT) tumbled 7.8% despite first-quarter net sales rising 7.1% to $175.7 billion and U.S. e-commerce surging 26%. The retailer maintained its annual sales and profit targets, striking a cautious tone that contrasted with Target’s (TGT) more optimistic guidance earlier this week. Walmart CFO John David Rainey warned that the company could face “somewhat higher retail price inflation” if current cost pressures persist. CFRA Research’s chief investment strategist Sam Stovall noted that Walmart’s outlook had investors worried about the impact of high oil prices and inflation on consumer spending.
Economic Data and Fed Minutes
Thursday’s economic data offered little relief. Initial jobless claims fell by 3,000 to a seasonally adjusted 209,000 for the week ended May 16, indicating continued labor market stability. Matthew Martin, senior U.S. economist at Oxford Economics, commented that “enough stability” in the labor market allows the Federal Reserve to maintain its current policy stance. Meanwhile, S&P Global’s flash manufacturing PMI rose to 55.3 in May, the highest since May 2022, signaling expansion. However, Chris Williamson, chief business economist at S&P Global Market Intelligence, suggested the economy “will struggle” to grow at more than a 1% annualized rate in the second quarter.
The Fed’s minutes from the April meeting, released Wednesday, showed that most officials saw risks to inflation skewed to the upside and indicated that further policy tightening might be needed if inflation remains above 2%. Nearly all supported holding the policy rate at 3.50% to 3.75%.
Other Notable Movers
IBM (IBM) climbed over 8%, while quantum-computing stocks D-Wave Quantum and Rigetti Computing each jumped around 25% following a Reuters report that the U.S. government is investing in certain firms for equity. Intuit (INTU) plunged nearly 20% after issuing a lower full-year revenue outlook for TurboTax and announcing job cuts.
Looking ahead, bearish bets could be at risk if oil prices retreat quickly on diplomatic progress, easing pressure on yields and reigniting interest in AI and consumer stocks. The primary concern remains that sustained high crude prices could keep inflation expectations elevated, prompting the Fed to maintain tight policy and reducing the margin of safety for richly valued equities.
