Nasdaq 100 futures recovered from a more than 1% decline to turn positive on Monday, May 18, as traders weighed surging bond yields and commodity prices against the underlying strength in the technology sector. The reversal followed a sharp sell-off on Friday that saw the Dow Jones Industrial Average fall more than 400 points, capping a week of heightened volatility.
The initial downturn was fueled by a combination of macroeconomic pressures. Three consecutive hot inflation prints last week sent U.S. Treasury yields to their highest levels since May 2025, with the 10-year yield touching 4.58% and the 30-year yield topping 5.1%. Compounding inflation fears, spot Brent crude rose more than 3% to trade around $109 a barrel, pushing up transportation and production costs. "The 30-year U.S. Treasury yield above 5.1% and the 10-Year above 4.58% are not numbers that growth stocks can ignore," noted technical analyst James Hyerczyk.
The session was marked by significant sector rotation. The Energy Select SPDR ETF (XLE) was the only major S&P 500 sector in positive territory Friday, gaining about 1.4%. In contrast, the AI-related stocks that have led the market rally faced heavy selling pressure. The Philadelphia Semiconductor Index slid 3.5%, with Nvidia (NVDA) falling more than 3% and Intel (INTC) sinking over 6% ahead of Nvidia's crucial earnings report next week. Bucking the trend, Microsoft (MSFT) rose more than 3% after reports that Pershing Square had built a position in the company.
The volatile session puts a spotlight on the market's ability to digest a shifting rate environment. CME FedWatch data shows the probability of a December rate hike has climbed to around 40%, a significant repricing from a week ago. The lack of a major catalyst from the Trump-Xi summit added to the headwinds, as traders who had positioned for a breakthrough came away empty-handed. For the Nasdaq Composite, the key level of 26,247.08, last Friday's close, remains critical; a close below it could signal a more significant trend change.
This article is for informational purposes only and does not constitute investment advice.
