Oil spike lifts Treasury yields

U.S. stocks fell on Friday, May 15, after a jump in oil prices pushed Treasury yields higher and knocked investors out of the market’s most crowded growth trade. The S&P 500 closed down 1.24% at 7,408.50, the Nasdaq Composite fell 1.54% to 26,225.14 and the Dow Jones Industrial Average dropped 537.29 points, or 1.07%, to 49,526.17, according to CNBC. Brent crude rose nearly 3% to about $109 a barrel in Reuters’ market report, while U.S. West Texas Intermediate settled up 4.2% at $105.42. The move broke a rally that had pushed the S&P 500 and Nasdaq to record highs a day earlier. ### Why did oil and bond yields hit stocks at the same time? The 10-year U.S. Treasury yield hit 4.54% on Friday, its highest level since early June 2025, Reuters reported. The rise in yields came as crude prices climbed and investors recalculated the risk that higher energy costs could keep inflation elevated and borrowing costs higher for longer. (cnbc.com) Brent crude rose almost 3% to $109 a barrel as the Strait of Hormuz remained closed, Reuters said, heightening concern about global energy supplies. CNBC reported that WTI settled at $105.42 and Brent at $109.26 after President Donald Trump said he was “not going to be much more patient” with Iran. (sahmcapital.com) Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told Reuters that higher energy prices were “fuelling inflation expectations and borrowing costs” and raising the cost of building new data centers. Her comment tied the oil move directly to the pressure on the technology sector that had led the rally. (sahmcapital.com) ### Which stocks took the hardest hit? Intel fell more than 6% on Friday, while Advanced Micro Devices lost 5.7% and Micron Technology dropped 6.6%, CNBC reported. Nvidia fell 4.4%, and Reuters said all three major indexes shed more than 1% as investors moved away from higher-risk equities. The selloff centered on semiconductor and AI-linked names that had driven the market’s advance. (sahmcapital.com) Reuters described the prior run as an “artificial-intelligence-fueled” rally, and CNBC said investors took profits in tech after sharp recent gains. Adam Crisafulli of Vital Knowledge wrote that the group had seen “an extremely unsustainable move in recent weeks” and remained vulnerable to profit-taking. (cnbc.com) Kenny Polcari, chief market strategist at Slatestone Wealth, told Reuters that the market had “gotten way ahead of itself” and had been caught up in the AI momentum trade. (money.usnews.com) ### What else was in the market’s line of fire? President Donald Trump’s talks with Chinese President Xi Jinping ended on Friday with no major breakthrough, according to Reuters and CNBC. Reuters said Beijing offered no clear help toward resolving the U.S.-Iran conflict, while CNBC reported that investors were disappointed by the lack of major deals from the summit. (cnbc.com) Matthew Keator, managing partner at the Keator Group, told Reuters that the meeting looked more like “a reset in relations” than an event likely to produce near-term measurable results. CNBC separately reported that Boeing shares fell 3.8% as investors judged the summit headlines underwhelming. (money.usnews.com) ### Did the selloff erase the broader rally? The S&P 500 still posted its seventh straight weekly gain, Reuters reported, even after Friday’s drop. The Nasdaq and the Dow fell for the week, with the Nasdaq snapping a six-week winning streak. Thursday, May 14, had marked another record-setting session, with the S&P 500 closing above 7,500 for the first time and the Dow reclaiming the 50,000 milestone, CNBC said. (money.usnews.com) Friday’s decline interrupted that run but did not fully reverse the gains built during the AI-led advance. ### What are investors watching next? Friday, May 15, also marked Jerome Powell’s last day as Federal Reserve chair, Reuters reported. (money.usnews.com) Reuters said incoming Chair Kevin Warsh now takes over as investors reassess whether a prolonged Iran war and higher energy prices could force a tighter policy path. (cnbc.com) CME FedWatch showed the odds of a 25-basis-point U.S. rate hike in December had more than doubled over the prior week to about 40%, according to Reuters. That rate outlook, along with oil prices and developments around the Strait of Hormuz, will give investors the next concrete markers after Friday’s break in the rally. (sahmcapital.com) (money.usnews.com)