Dow slips 44 pts as Treasury yields, oil prices keep Wall Street cautious

• The 10-year Treasury yield climbed to 4.631%, its highest since February 2025, amid a global bond selloff reflecting fears that elevated oil prices could keep inflation and borrowing costs higher for longer.
• WTI crude traded above $103 and Brent above $107 per barrel due to stalled Iran conflict resolution and geopolitical tensions, including a reported drone strike on a UAE nuclear plant.
• Markets now price over 40% probability of a Fed rate hike in January, with critical earnings from Nvidia (Wednesday) and Walmart expected to shape sentiment amid AI demand and consumer spending concerns.

Market Summary: Wall Street Cautious Amid Rising Yields and Oil Prices

Market Performance:

US equities opened mixed on May 18, 2026, with the Dow Jones declining 44 points (-0.08%), the S&P 500 flat, and the Nasdaq gaining 0.13%. This follows Friday's sharp selloff when the Nasdaq dropped 1.5%—its worst session since late March—pulling back from record highs reached earlier in the week.

Key Drivers:

*Treasury Yields:* The 10-year Treasury yield climbed to 4.631%, its highest level since February 2025, amid a global bond selloff affecting the UK and Japan. Rising yields reflect intensifying inflation concerns tied to elevated energy prices.

*Oil Prices:* WTI crude traded above $103/barrel while Brent reached approximately $110.66/barrel. Geopolitical tensions involving Iran and a reported drone strike on a UAE nuclear facility fueled energy market volatility. President Trump's warning that Iran needed to "get moving" added to uncertainty.

Fed Policy Outlook:

Markets are repricing rate expectations following stronger-than-expected inflation data. CME FedWatch indicates over 40% probability of a January rate hike—a hawkish shift. Investors await Wednesday's Fed minutes and the transition to new Fed Chair Kevin Warsh, who faces pressure balancing inflation concerns against White House rate-cut demands.

Corporate Focus:

Nvidia and Walmart earnings this week are critical. Nvidia reports Wednesday amid a 60%+ surge in the Philadelphia Semiconductor Index driven by AI chip demand. Walmart's results will provide insight into consumer spending under persistent inflation and higher fuel costs.

Notable M&A:

NextEra Energy announced acquisition of Dominion Energy for $66.8 billion.

Market Sentiment: Bearish (28/100 AI score), reflecting caution around inflation persistence and policy uncertainty.