S&P and Nasdaq slip as yields climb

The S&P 500 and Nasdaq closed lower on Monday, May 18, after rising Treasury yields and higher oil prices put pressure on technology shares and renewed concern that inflation and borrowing costs could stay elevated. Reuters reported that investors took some profits in tech as the 10-year Treasury yield climbed as high as 4.631% earlier in the session, its highest level since February 2025, before easing slightly. Brent crude also climbed to a two-week high as markets watched whether there would be progress toward ending the Iran war. ### Why did higher yields hit stocks, especially tech? The 10-year Treasury yield matters because it feeds directly into how investors value future corporate earnings. When yields rise, the present value of those future profits falls, and that tends to weigh most heavily on growth stocks whose valuations depend more on earnings expected years ahead. Monday’s move was concentrated in that part of the market, with Reuters and Yahoo Finance both reporting pressure on technology shares as yields climbed above 4.6%. (money.usnews.com) Oil prices added to that pressure. Reuters said the bond-market selloff was fueled by a surge in oil prices, which raised concern that inflation could remain sticky and keep borrowing costs elevated for longer. That combination — higher yields and higher energy prices — is one reason a modest move in indexes can still feel more consequential beneath the surface. (money.usnews.com) ### What does the market-breadth data say about the rally? Charles Schwab said on May 19 that only about half of stocks were trading above their 50-day moving average, a sign that participation in the rally remained limited even with headline indexes near recent highs. That metric is a basic breadth gauge: when fewer stocks are above that trend line, leadership is concentrated in a smaller group of names. (y94.com) Breadth measures from other market trackers pointed in the same direction. Barchart showed the share of S&P 500 stocks above their 50-day average at 43.93% for May 15, the last published reading in its search result, reinforcing the idea that many stocks were not keeping pace with the index. That does not by itself predict a reversal, but it does show the rally has not been broad-based. (schwab.com) ### Why are traders talking about momentum now? Benzinga, citing Goldman Sachs research published May 18, said episodes of sharp momentum rallies near market highs have often been followed by weak forward returns. The report pointed to a 30% seven-week gain in the Invesco S&P Momentum ETF, its strongest run since the fund launched in 2016. Goldman’s historical comparison, as summarized by Benzinga and mirrored in other pickups, focused on similar stretches since 1980. (barchart.com) That argument is not that markets must fall immediately. It is a warning about concentration and chasing recent winners at a point when indexes are already elevated. In the current market, much of that momentum has been tied to the AI trade and a relatively small group of large-cap leaders. ### What are investors watching next? (benzinga.com) Nvidia and Walmart are due to report later this week, and Reuters said those results were already a focal point for investors on Monday. Nvidia’s report is expected on Wednesday, May 20, and it is being treated by market participants as a key test of the AI-led trade that has helped drive index performance. Wednesday, May 20, is the next major date on the calendar. (benzinga.com) Nvidia and Walmart are both scheduled to report then, and traders will be watching yields, oil and market breadth alongside those earnings releases. (y94.com)