By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panelists agree that geopolitical oil spikes and inflation fears are near-term headwinds, but they disagree on the sustainability of demand and the impact of Nvidia's earnings on market sentiment. The key risk is an oil-driven inflation shock or geopolitical flare-up, while the key opportunity lies in Nvidia's earnings potentially re-pricing the market higher.
Risk: An oil-driven inflation shock or geopolitical flare-up
Opportunity: Nvidia's earnings potentially re-pricing the market higher
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
June S&P 500 E-Mini futures (ESM26) are down -0.41%, and June Nasdaq 100 E-Mini futures (NQM26) are down -0.30% this morning, pointing to a lower open on Wall Street as oil prices continue to rise amid the stalemate between the U.S. and Iran.
The price of WTI crude rose over +1% on Monday amid prospects of a prolonged closure of the Strait of Hormuz. U.S. President Donald Trump said on Sunday on his social media platform that “For Iran, the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them.” The remarks heightened concerns that the conflict could shift back into a more active military phase, delaying any normalization of traffic through the waterway. Iran’s Islamic Republic News Agency quoted the Defense Ministry spokesman as saying the Iranian Armed Forces are “fully prepared to confront any new potential attack by the U.S. and the Israeli regime against the country.” Meanwhile, a drone ignited a fire in a power station at the United Arab Emirates’ Barakah nuclear plant on Sunday, while Saudi Arabia said it had intercepted three drones.
The 10-year T-note yield rose one basis point to 4.61% on Monday as higher oil prices fueled inflation concerns. Investors now see a 70% chance of a 25 basis point Fed rate hike by year-end and are fully pricing in a move by March 2027.
Investor focus this week is on an earnings report from chip giant Nvidia, the minutes of the Federal Reserve’s latest policy meeting, and a fresh batch of U.S. economic data.
In Friday’s trading session, Wall Street’s major equity averages closed sharply lower. Chip stocks sank, with Arm Holdings (ARM) slumping over -8% to lead losers in the Nasdaq 100, and Micron Technology (MU) sliding more than -6%. Also, cryptocurrency-exposed stocks slid after Bitcoin dropped more than -2%, with Coinbase Global (COIN) falling over -7% and MARA Holdings (MARA) declining more than -6%. In addition, travel stocks fell as oil prices climbed, with United Airlines (UAL) and American Airlines (AAL) dropping over -3%. On the bullish side, DexCom (DXCM) rose more than +6% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after activist investor Elliott Investment Management took a stake in the company and reached a settlement that will place two independent directors on the board.
Economic data released on Friday showed that U.S. industrial production climbed +0.7% m/m in April, stronger than expectations of +0.3% m/m, and manufacturing production rose +0.6% m/m, stronger than expectations of +0.2% m/m. Separately, the U.S. May Empire State manufacturing index unexpectedly rose to a 4-year high of 19.6, stronger than expectations of 7.3.
“Manufacturing output already was picking up at the start of this year, helped by solid growth in output of computers and electronics due to the AI boom, and the fading of the tariff-related uncertainty,” according to Oliver Allen at Pantheon Macroeconomics. “But fears around the potential disruption to supply chains due to the war in the Middle East now seem to be providing a substantial additional tailwind, as companies pull forward orders and build precautionary inventories.”
U.S. rate futures have priced in a 99.1% probability of no rate change and a 0.9% chance of a 25 basis point rate cut at the next FOMC meeting in June.
All eyes will be on Nvidia (NVDA) this week, as the AI chip titan prepares to report its first-quarter results on Wednesday. Investors expect that the company will comfortably beat Wall Street’s estimates and deliver strong guidance for the current quarter. Retailers such as Walmart (WMT), Home Depot (HD), The TJX Companies (TJX), Lowe’s (LOW), Target (TGT), and Ross Stores (ROST), along with notable companies like Analog Devices (ADI), Keysight Technologies (KEYS), Intuit (INTU), and Deere & Company (DE), are also set to release their quarterly results this week.
Market participants will also be monitoring the Fed’s minutes from the April 28-29 meeting, set for release on Wednesday. The FOMC left interest rates unchanged last month, but three officials dissented from the easing bias in the central bank’s post-meeting statement in favor of more neutral language suggesting the next move could be either a cut or a hike. The minutes will help clarify how many non-voting policymakers also supported such a shift. HSBC economists noted that “the minutes from the April meeting should show considerable discussion about the outlook and risks related to inflation and inflation expectations.” Meanwhile, Fed Governors Christopher Waller and Michael Barr, along with Philadelphia Fed President Anna Paulson and Richmond Fed President Tom Barkin, are scheduled to speak this week.
Investors will also be watching for Kevin Warsh to be formally sworn in as Fed chair, with Jerome Powell now serving in a pro tempore role after his term ended on Friday. Mr. Warsh’s approval is reportedly awaiting final paperwork, including the president’s signature and confirmation of divestment from some holdings. He could be sworn in as soon as Monday.
In addition, market watchers will keep an eye on U.S. economic data releases. Preliminary U.S. May purchasing managers’ surveys for manufacturing and services will be the main highlight, providing an important update on how the economy is performing in the third month of the Middle East conflict. The final reading of the University of Michigan’s May consumer sentiment index will also attract attention. Other noteworthy data releases include Pending Home Sales, Initial Jobless Claims, the Philly Fed Manufacturing Index, Building Permits (preliminary), Housing Starts, and the Conference Board’s Leading Economic Index.
The U.S. economic data slate is largely empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.61%, up +0.26%.
The Euro Stoxx 50 Index is down -0.28% this morning as the deadlock between the U.S. and Iran continued to push oil prices higher, dampening risk appetite. Luxury, construction, and automobile stocks were among the biggest losers on Monday. Travel stocks also slid as oil prices rose and Ryanair cautioned about weaker-than-expected summer pricing trends. Limiting losses, energy and media stocks advanced. Oil prices edged higher on Monday after U.S. President Donald Trump voiced frustration with Iran and warned that the “clock is ticking,” hours after drones struck a nuclear power plant in the United Arab Emirates. Meanwhile, Eurozone government bond yields remained at multi-decade highs on Monday as investors fretted over the inflationary impact of a prolonged U.S.-Iran conflict. Money markets are currently pricing in more than two ECB rate hikes by year-end, with the first one expected in June. Investors this week will closely watch preliminary Eurozone PMI data for May. “We expect the Eurozone’s composite PMI to remain in mild contractionary territory, although higher delivery times will continue to distort the manufacturing PMI upwards,” said Daniel Kral at Oxford Economics. Market participants will also keep an eye on the Eurozone’s final April inflation data and Germany’s Ifo business confidence index for May. In addition, the European Commission’s latest economic outlook for the region will attract attention. In corporate news, Publicis (PUB.P.DX) rose over +2% after the advertising group agreed to buy U.S. data collaboration company LiveRamp in an all-cash deal valued at about $2.2 billion.
The European economic data slate is mainly empty on Monday.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.09%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.97%.
China’s Shanghai Composite Index closed slightly lower today as a series of weak domestic economic data weighed on sentiment. Official data released on Monday showed that China’s economic activity unexpectedly softened in April despite resilient exports, heightening pressure on Beijing to introduce additional measures to support growth. Retail sales, a gauge of consumption, slowed in April to their weakest pace of growth since 2022. Also, industrial production, fixed-asset investment, and the real estate sector all showed signs of weakness, falling short of economists’ expectations. Nomura chief China economist Ting Lu said that the country’s disappointing April economic activity data suggest Beijing may need to ramp up policy support to stabilize growth. However, it remains unclear whether policymakers will move swiftly, as solid first-quarter economic performance and robust exports have dampened expectations for near-term stimulus measures. Agricultural stocks slumped on Monday after the White House said Beijing had committed to purchasing at least $17 billion worth of U.S. agricultural products annually from 2026 through 2028. Consumer stocks also slid. However, the benchmark index’s losses were limited as chip stocks climbed after U.S. officials signaled during last week’s two-day summit in Beijing that semiconductor export controls were not a major focus. In corporate news, Li Auto tumbled over -14% in Hong Kong after the debut of its upgraded flagship SUV failed to ease investor concerns about intensifying competition in China’s auto market. Investor attention now turns to the People’s Bank of China, which is set to announce the country’s benchmark lending rates later this week. Economists expect the one-year loan prime rate to stay unchanged at 3.00% and the five-year LPR at 3.50%.
The Chinese April Industrial Production rose +4.1% y/y, weaker than expectations of +6.0% y/y.
The Chinese April Retail Sales rose +0.2% y/y, weaker than expectations of +2.0% y/y.
The Chinese Fixed Asset Investment unexpectedly fell -1.6% y/y in the January-April period, weaker than expectations of +1.7% y/y.
The Chinese April Unemployment Rate was 5.2%, stronger than expectations of 5.3%.
Japan’s Nikkei 225 Stock Index closed lower today as a selloff in Japanese government bonds deepened amid mounting inflation concerns. The deadlock over the Iran war pushed oil prices higher in Tokyo trading, with U.S. President Trump warning Tehran that the “Clock is Ticking” on a peace deal. Also, a nuclear power plant in the United Arab Emirates came under attack, and Saudi Arabia said it had intercepted three drones, underscoring the risks to the fragile ceasefire. Real estate and automobile stocks led the declines on Monday. Meanwhile, Japanese government bonds tumbled on Monday as inflationary pressures and fiscal concerns intensified. Japan’s 10-year yield climbed as much as 10 basis points to levels last seen in 1996, while the nation’s 30-year yield jumped as much as 20 basis points to the highest since its 1999 debut, before both trimmed some of the move. JGB yields followed a surge in Treasury yields, which climbed to their highest level in a year on Friday as rising oil prices fueled inflation fears. Concerns over government spending also pressured JGBs after Reuters reported on Monday that Japan’s government is likely to issue new debt to help finance a planned supplementary budget aimed at cushioning the economic blow from the Middle East conflict. Investor focus this week is on Japan’s preliminary first-quarter GDP data, which will provide insight into the strength of underlying demand. The nation’s inflation data for April will also be closely watched, offering a key input for Bank of Japan policy as price pressures broaden. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +3.64% to 30.79.
Pre-Market U.S. Stock Movers
Most members of the Magnificent Seven stocks edged lower in pre-market trading, with Tesla (TSLA) falling nearly -1% and Meta Platforms (META) dropping about -0.8%.
UnitedHealth Group (UNH) slid over -4% in pre-market trading after Berkshire Hathaway sold its entire stake in the health insurer.
Applied Materials (AMAT) fell more than -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight.
Some chip stocks are attempting to rebound in pre-market trading, with Micron Technology (MU) and Marvell Technology (MRVL) rising over +1%.
Dominion Energy (D) jumped over +15% in pre-market trading following reports that NextEra Energy was in talks to buy the company.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - May 18th
Evolution Metals & Technologies (EMAT), Brady (BRC), Agilysys (AGYS), PrimeEnergy Resources (PNRG), SCHMID Group (SHMD), Gossamer Bio (GOSS), OS Therapies (OSTX), FatPipe (FATN), The Cato Corporation (CATO), Sachem Capital (SACH).
Four leading AI models discuss this article
"Nvidia's earnings and AI-fueled manufacturing resilience will cap geopolitical downside this week."
The article emphasizes geopolitical oil spikes and inflation fears as the main near-term headwinds, with futures pointing lower and rate-hike odds climbing to 70% by year-end. Yet it underplays how April's +0.7% industrial production beat and the 19.6 Empire State reading already embed AI-driven pull-forward demand plus precautionary stockpiling. Nvidia's Wednesday print remains the dominant catalyst; a strong beat and raised guidance could quickly re-price the 11.6x forward multiple higher even if 10-year yields hold near 4.61%. Fed minutes are more likely to show contained dissent than a hawkish pivot.
A rapid escalation closing the Strait of Hormuz or direct strikes could push WTI above $90 within days, overwhelming any Nvidia or data upside and forcing a sharper re-pricing of both equities and the Fed path.
"Manufacturing demand is accelerating despite geopolitical noise, but the inflation narrative is being driven by oil psychology rather than underlying price pressures—watch whether Nvidia's guidance confirms demand strength or signals caution."
The article frames this as a straightforward risk-off setup: Iran tensions → oil spike → inflation fears → rate hike odds rise → equities sell. But the data buried in here tells a different story. U.S. manufacturing just printed a 4-year high Empire State index (19.6 vs. 7.3 expected), industrial production beat +0.7% vs. +0.3%, and the article itself notes companies are pulling forward orders due to supply-chain fears. That's demand, not demand destruction. The 70% rate-hike probability is priced on oil alone, not on actual inflation data. Meanwhile, China's weakness and Japan's bond volatility suggest the real risk is deflation/stagflation, not runaway inflation. Nvidia earnings Wednesday will be the real tell—if guidance holds, this dip is noise.
Oil at +1% is noise historically, and the article conflates Trump's rhetoric with actual military escalation; the Strait of Hormuz hasn't actually closed, and insurance costs for shipping haven't spiked enough to suggest real supply disruption is priced in yet.
"The combination of rising energy-driven inflation and the transition to a new Fed chair creates an environment where equity multiples are likely to compress, regardless of near-term AI-related earnings strength."
The market is currently fixated on the geopolitical risk premium in oil, but the real structural shift is the transition to a higher-for-longer rate environment, now being cemented by fiscal-driven inflation fears. While the article highlights the AI boom as a tailwind, the divergence between strong industrial production and the bond market’s reaction suggests we are nearing a 'bad news is bad news' regime. If the 10-year Treasury yield sustains levels above 4.6%, equity valuations—particularly in high-multiple tech—will face significant pressure regardless of Nvidia’s earnings. The market is underestimating the potential for a policy error as the Fed transitions under new leadership.
The 'precautionary inventory' build-up mentioned by Pantheon could lead to an unexpected earnings beat across the industrial and semiconductor sectors, potentially decoupling stocks from the bond yield spike.
"The near-term pullback hinges primarily on oil driven macro risk from the Iran impasse; unless Nvidia guides higher and the Fed minutes tilt dovish, the market is set to drift lower."
Today’s setup looks bearish at first glance: futures imply a negative open as oil climbs on Iran stalemate and Nvidia and Fed minutes loom. But the backdrop isn’t uniformly negative. U.S. manufacturing signals, including April industrial production and the Empire State index, point to healthy domestic demand and AI-related capex that could support earnings despite higher energy costs. The market has priced in a June hold with limited downside risk for now, and Nvidia’s print could surprise to the upside while Fed minutes hint at policy patience rather than aggression. The key risk is an oil driven inflation shock or a geopolitics flare that could overwhelm any earnings backstop.
The strongest countercase is that Nvidia could disappoint or guide conservatively, and the Fed minutes could solidify a hawkish bias, sending rates higher and pressuring equities even with decent data.
"Tariff front-running may inflate manufacturing data while carry-trade unwind risks amplifying tech selling pressure."
Claude correctly flags the Empire State beat as demand-positive, yet misses that tariff-driven front-running can inflate readings without sustaining orders into Q3. If oil holds above $80, those same manufacturers face margin compression that AI capex alone won't offset. No one has linked Japan's bond volatility to potential forced selling in U.S. tech via carry-trade unwind, which could amplify any Nvidia disappointment regardless of Fed minutes.
"Tariff front-loading and carry-trade unwind are real risks, but neither invalidates the underlying demand signal if Q2 earnings confirm it."
Grok's carry-trade unwind risk is real but timing-dependent—BoJ hasn't signaled imminent tightening, so forced liquidation remains tail risk, not base case. More pressing: tariff front-loading inflating Empire State doesn't invalidate the demand signal itself. If orders sustain into Q2 earnings, that's real capex, not just inventory. The margin compression argument assumes oil stays $80+; at $75–78, manufacturers absorb it. Nvidia Wednesday resolves this faster than Fed minutes.
"Rising Treasury issuance and QT are creating a liquidity vacuum that will compress equity multiples regardless of individual earnings beats."
Grok and Claude are ignoring the liquidity drain. The real threat isn't just oil or carry trades, but the Treasury's TGA (Treasury General Account) refill and QT (quantitative tightening) hitting simultaneously. Even if Nvidia beats, the sheer volume of new bond issuance required to fund the deficit at 4.6% yields will crowd out equity multiples. We are seeing a structural liquidity squeeze that makes 'earnings beats' irrelevant if the cost of capital effectively chokes off buyback capacity.
"Nvidia strength can offset some liquidity restraint, but the real risk is broader funding stability across carry trades and non-U.S. liquidity, not just bond issuance."
Gemini, you flag a real liquidity risk from QT and the TGA refill, but the thesis rests on a single channel. If Nvidia guides higher (speculative), that could offset restraint by sustaining risk appetite in mega-cap tech and AI capex, even with higher yields. The bigger unknown is funding stability across carry trades and non-U.S. liquidity during flare-ups, not just bond issuance. Liquidity is a spectrum, not a single cliff.
The panelists agree that geopolitical oil spikes and inflation fears are near-term headwinds, but they disagree on the sustainability of demand and the impact of Nvidia's earnings on market sentiment. The key risk is an oil-driven inflation shock or geopolitical flare-up, while the key opportunity lies in Nvidia's earnings potentially re-pricing the market higher.
Nvidia's earnings potentially re-pricing the market higher
An oil-driven inflation shock or geopolitical flare-up