Crude oil surges, triggering a wave of bond market sell-offs, U.S. stocks retreat, Nvidia drops over 4%, long-term bond yields hit multi-year highs, metals plummet

Oil prices soaring have intensified concerns about a resurgence of inflation, prompting central banks to raise interest rates. The global bond market has experienced sell-offs, long-term yields have surged, and European and American stock markets have weakened. The deadlock over the passage through the Strait of Hormuz between the US and Iran remains unresolved, leading to an acceleration in crude oil prices. Expectations for rate hikes by central banks have increased, the US dollar has maintained its upward momentum this week, and gold and silver have plummeted. Industrial metals like copper have fallen sharply across the board amid economic worries.

This week, crude oil futures and US Treasury yields have collectively risen, with major US stock indices experiencing a rollercoaster ride. The S&P 500, driven by chip and tech stocks, closed higher for three days but lost support from tech on Friday, leading to a correction.

On Friday, the three major US stock indices all opened lower, with the S&P and Nasdaq hitting new highs but abruptly stopping their rally. During the day, the Nasdaq once fell 2%, the S&P and Dow Jones dropped over 1%, led by declines in chip and tech stocks that had previously driven the market higher. Due to the pullback on Friday, the Nasdaq and Philadelphia Semiconductor Index erased their gains from the first four days of the week, turning from gains to losses. Nvidia, which had set new all-time highs in the first four days, once fell nearly 5% intraday, and Cerebras, which doubled on its debut Thursday, once plunged over 10%.

Inflation fears triggered a global bond sell-off, with long-term yields reaching multi-year highs. Japan’s April PPI rose unexpectedly by 4.9% year-over-year, the highest in nearly three years, driven by rising oil and chemical prices. Japan’s 30-year government bond yield rose to 4% for the first time since 1999. Beyond inflation, UK 30-year government bond yields surged 20 basis points intraday to a new high since 1998 amid domestic political turmoil; US Treasury yields also hit their highest since 2007 during the same period.

Global sovereign bond yields rose across the board this week, with Bloomberg’s related tracking index reaching a nearly three-year high.

Edward Jones senior global investment strategist Angelo Kourkafas said, “The rise in global bond yields is dampening market risk sentiment; this upward trend is driven by multiple factors, including inflation concerns, expectations of rate hikes by central banks, and government debt worries as countries try to buffer the impact of rising energy prices.”

Among commodities, international crude oil prices accelerated intraday, with US WTI and Brent crude hitting new daily highs, rising over 4% and nearly 4%, respectively. No substantial progress has been made on the passage through the Strait of Hormuz: after Trump’s visit to China, he reiterated that Iran’s plan is unacceptable and threatened to destroy Iran’s infrastructure. Iran’s foreign minister reaffirmed that the Strait of Hormuz is open to non-hostile ships and should be jointly managed by Iran and Oman. Gold and silver futures in New York continued to decline amid rising rate hike expectations, falling nearly 4% and over 10% intraday.

Polymarket’s prediction market shows that the probability of the Strait of Hormuz resuming normal shipping before the end of May fell to 6% on Friday.

Pepperstone Group strategist Wu Dilin said, “The market has fully priced in the possibility of the Fed cutting rates this year and is increasingly considering the likelihood of rate hikes before the end of the year. With oil prices remaining high, the urgency of how long stocks can sustain in this environment is growing.”

US April CPI and PPI data released this week exceeded expectations, prompting a reassessment of the Fed’s rate hike outlook, which was a key driver behind the sharp declines in gold and silver over the past two days. The US dollar also strengthened throughout the week. The CME FedWatch tool on Friday shows traders currently assign a 51% chance of a rate hike in December, and over 70% chance of a hike by March next year.

After the US released April CPI, PPI, and import/export prices exceeding expectations, market expectations for a rate hike by the Fed this year have intensified.

Forex analyst Razan Hilal of Forex.com pointed out in a report that the current macro environment “is strengthening demand for interest-bearing assets while weakening the appeal of non-yielding precious metals.” Hilal said traders are reassessing whether the strong rally in precious metals earlier this year can withstand tightening financial conditions.

The three major US stock indices closed down more than 1%, with the S&P dropping from its record high but still marking its seventh consecutive weekly gain—the longest streak in over two years. The Nasdaq ended its six-week winning streak; the energy sector rose over 2%, the only sector to gain on Friday; the chip index fell 4%, with Micron and Intel down over 6%, Nvidia ending its seven-day winning streak but still up nearly 5% for the week; Bill Ackman’s recent increased holdings helped Microsoft rise over 3%; Cerebras, listed the day after its debut, fell 10%.

Major US stock indices:

• S&P 500 closed down 1.24%, at 7,408.50 points, up 0.13% for the week, extending its seven-week winning streak—the longest since December 29, 2023.
• Dow Jones fell 537.29 points, or 1.07%, to 49,526.17, down 0.17% for the week after two consecutive weekly gains, marking its second weekly decline in the past seven.
• Nasdaq dropped 1.54%, to 26,225.145 points, down 0.08% for the week.
• Nasdaq 100 declined 1.54%, to 29,125.20 points, down 0.38% for the week, ending its six-week winning streak.
• Russell 2000 fell 2.44%, to 2,793.299 points, down 2.37% for the week, after seven weeks of gains.
• Nasdaq Tech Market Cap Weighted Index declined 1.60%, to 2,833.1335 points, down 0.29% for the week.

Due to the pullback on Friday, only the S&P managed to hold its weekly gains among the major US indices.

US Sector ETFs:

• Among the S&P 500 sectors, only energy gained more than 2% on Friday; materials fell nearly 3%, utilities dropped over 2%. Most sector ETFs declined that day, with semiconductor ETFs leading the decline, down over 4%. Utilities, aerospace, and global tech ETFs fell over 2%, while energy ETFs rose over 2%.

Tech Giants:

• The Bloomberg US Tech Seven (Magnificent 7) total return index fell 1.28%.
• Tesla down 4.75%, Nvidia down 4.42%, Amazon down 1.15%, Alphabet down 0.97%, Meta down 0.68%.
• Apple rose 0.68%, hitting a new weekly closing high set on Wednesday; Microsoft gained 3.05%, with hedge fund mogul and Pershing Square CEO Bill Ackman revealing he has been increasing his Microsoft holdings since its last quarterly earnings, calling the company’s valuation “very attractive.”
• Nvidia gained 4.7% over the week, Apple up 2.36%, Microsoft up 1.64%, Meta up 0.75%; Amazon fell 3.13%, Tesla down 1.43%, Alphabet down 0.94%.

The S&P 500 mainly relied on the “Tech Seven” to continue its overall weekly rise, while the other 493 components declined.

Chip Stocks:

• Philadelphia Semiconductor Index fell 4.02%, to 11,588.463 points, down 1.59% for the week.
• Intel declined nearly 6.2%, AMD about 5.7%, Broadcom 3.3%, TSMC US down 3.2%. Despite higher-than-expected Q2 revenue and profits, Applied Materials fell about 0.9%, while Qualcomm, which dropped over 6% Thursday, rose 0.7%.
• In memory chips, SanDisk fell nearly 4.5% on Thursday but rose 1.8%, Micron down 6.6%, Western Digital down nearly 1.5%, Seagate down nearly 1.2%.

AI Concept Stocks:

• Nvidia’s “challenger” Cerebras Systems (CBRS), which surged 68% on its debut day, fell nearly 10.1% the next day; Supermicro (SMCI) declined about 6%, Oracle (ORCL) down nearly 1.4%.
• Palantir (PLTR) rose nearly 0.2%, announcing a multi-year partnership with Experian to develop autonomous AI agents. After this, AI platform ServiceNow (NOW) gained nearly 5.1%.

Chinese ADRs:

• Nasdaq Golden Dragon China Index fell 2.80%, to 6,839.65 points, down 2.22% for the week.
• Kingsoft Cloud down 9.5%, Alibaba down about 6%, Bilibili down over 6%, Xiaopeng down 5.7%, Baidu down nearly 5.6%, Xpeng down 3.1%.

Pan-European stocks fell over 1%, ending a two-week rally, with the entire week turning from gains to losses, and the mining sector dropping over 5%.

Pan-European indices:

• STOXX Europe 600 declined 1.48%, to 606.92 points, near the lows of the week set on Tuesday, down 0.85% for the week after two weeks of gains.

STOXX 600 sectors:

• Metals plunged, dragging the basic resources sector down 5.1%. Among components, Poland’s Copper Group fell 8.63%. Technology declined nearly 2%, with Dutch-listed European top-market-cap chip stocks ASML down 4.42%, Infineon down 4.23%, while SAP rose 2.01%.
• Retail fell over 4%, leading the declines; construction and materials down about 4%; utilities and real estate down over 3%; industrials down about 3%; while oil & gas, telecom, and healthcare sectors gained over 1%.

Major European country indices:

• France, Germany, UK, Italy, Spain stocks all fell more than 1% on Friday, ending two consecutive weeks of gains.

• All major European indices declined this week, ending a two-week rally in Germany, Italy, and Spain, while France and UK declined for four consecutive weeks.

30-year UK and US bond yields hit new highs since 1998 and 2007 respectively; 10-year US Treasury yield intraday rose over 10 basis points, reaching 4.60%, a one-year high.

European government bonds:

• By the close, UK 10-year benchmark yields about 5.17%, up about 18 basis points for the day; 30-year UK yields about 5.85%, up about 19 basis points, intraday reaching 5.86%, the highest since 1998; German 10-year yields about 3.16%, up about 12 basis points; 30-year German yields about 3.66%, up about 10 basis points.
• European bond prices declined across the week, with 10-year UK yields rising about 26 basis points and 10-year German yields rising about 16 basis points.

• The 30-year UK bond yield broke above 5.80%, reaching a new high since 1998.

US Treasuries:

• The 10-year US Treasury yield approached 4.60% intraday, the highest since February 2025, closing at about 4.59%, up about 11 basis points for the day, rising five days in a row, with a weekly increase of about 24 basis points.
• The 2-year US Treasury yield rose above 4.08% during the midday session, the highest since March 2025, closing at about 4.07%, up about 5 basis points, climbing for the fourth day this week and the second consecutive day, with a weekly increase of about 19 basis points.
• The 30-year US Treasury yield approached 5.13% at market close, up about 12 basis points intraday, reaching a new high since July 2007; the close was 5.12%, with a weekly rise of about 18 basis points.

The 30-year US Treasury yield hit a nearly 19-year high on Friday.

US dollar index has risen five consecutive days and reached a new high since late April for three days; GBP has fallen over 2% this week, the largest weekly decline in a year and a half; the yen hit a new low since late April, heading toward the potential intervention level of 160; offshore RMB briefly fell below 6.81, retreating from a three-year high; Bitcoin briefly dropped below $79k, nearly 4% below the daily high.

US dollar:

• ICE US Dollar Index (DXY) rose to 99.32 during US stock midday, reaching a new high since April 30 for two days, then again surpassing that level, intraday up 0.5%.
• By market close on Friday, the dollar index was at 99.284, up nearly 0.5% for the day, with a weekly gain of about 1.4%; Bloomberg dollar spot index rose over 0.4% intraday, up over 1.2% for the week, both marking five consecutive days of gains and reversing two weeks of declines.

The Bloomberg dollar spot index posted its second-largest weekly gain since November 2024.

Non-dollar currencies:

• The yen declined for five consecutive days, with USD/JPY reaching 158.84 after US stock market close, surpassing the high since April 30 when Japan’s government was reportedly intervening in the currency market, up over 0.3% intraday.

The yen approached 160, erasing most of its gains since late April intervention.

• GBP/USD fell to 1.3317 during US stock morning, also hitting a low since April 8, and closed below 1.3330, down nearly 0.6% intraday. The weekly decline exceeds 2.2%, the largest since November 2024.
• Offshore RMB against USD briefly hit a high of 6.7857 during Asian hours, then dropped to a low of 6.8165 during US midday, retreating from the high of 6.7816 on Thursday, which was the highest since February 2023. As of 4:59 am Beijing time on May 16, offshore RMB was at 6.8139, down 273 points from Thursday’s New York close, with a weekly decline of 168 points after two weeks of gains.

Cryptocurrencies:

• Bitcoin (BTC) surged past $81.6k during Asian hours to hit a daily high, then dropped below $78.7k during US hours, the lowest since May 4, down about $3,000 or nearly 4% from the high. At US market close, it was below $79.1k, down about 3% in 24 hours and over 1% for the week.
• Ethereum (ETH) briefly surged past $2,300 during Asian hours, then fell below $2,210 during US hours, the lowest since April 13, down over 4% from the high. At market close, it was below $2,230, down over 3% in 24 hours and about 4% for the week.

Crude oil closed with two consecutive gains to over a week’s high, with US WTI rising over 4% intraday and over 10% for the week.

Crude Oil:

• During US stock intraday highs, WTI surged to $105.79, up nearly 4.6%, Brent crude rose to $109.75, up over 3.8%.
• By US midday close, crude had gained for two days and the fifth day in the last six trading days, with only Wednesday down this week. After a pullback last week, crude rebounded, marking its third weekly gain in four weeks.
• WTI June futures rose 4.20%, to $105.42 per barrel, reaching the highest since May 4, with a weekly increase of 10.48%. Brent July futures gained 3.35%, to $109.26 per barrel, the highest since May 5, up 7.87% for the week.

WTI held above $100 on Friday, approaching the high since Iran conflict erupted.

US gasoline and natural gas:

• NYMEX June gasoline futures rose 2.67%, to $3.7019 per gallon, up 4.97% for the week; NYMEX June natural gas futures rose 2.28%, to $2.96 per million British thermal units, hitting a high since March 27, marking a third consecutive weekly gain, with a weekly increase of 7.36%.

Gold and silver fell for two consecutive days to over a week’s lows, with gold dropping nearly 4% intraday and down over 3% for the week. Silver futures once fell over 10% intraday. LME tin dropped over 4%, leading industrial metals; LME copper declined nearly 3%, LME copper futures down nearly 5%, both off record highs. Due to supply concerns, LME zinc rose 3% for the week.

Gold:

• During US stock intraday lows, COMEX gold futures fell to $4,513.8, down nearly 3.7%, spot gold dropped to $4,511.93, down just over 3%.
• By US midday, COMEX May gold futures declined 2.61%, to $4,555.8 per ounce, the largest drop since April 2, and the lowest close since May 5, down 3.49% for the week, the largest weekly decline since March 20.

Under dollar strength pressure, spot gold tested the $4,500 level.

Silver:

• NYMEX silver futures declined for two days, with the main contract hitting a daily low of $76.175 during US stock midday, down over 10.7% intraday.
• COMEX May silver futures fell 9.13%, to $77.161 per ounce, the largest daily decline since February 12, and the lowest close since May 6, down 4.02% for the week, after a rebound last week, marking the third weekly decline in four weeks.

Silver gained over 10% during the week midweek but retraced more than half of that gain afterward.

Copper:

• NYMEX copper, after four consecutive gains, declined for two days, with the main contract hitting a daily low of $6.2705 during European trading, down nearly 5.2% intraday.
• COMEX May copper fell 4.81%, to $6.2515 per pound, the largest decline since July 31, and the lowest since then, down 0.04% for the week, after two weeks of gains and six weeks of gains in the past eight.

London Base Metals:

• By Friday close, London tin and copper hit over a one-week low, while nickel declined for two days, and zinc, which rebounded to a three-year high on Thursday, fell over 1%. Aluminum, which hit a four-year high after two days of gains, declined for two days, and lead, which had four consecutive weekly gains, fell nearly 2%.
• The week saw mixed performance among London metals: tin and copper retreated after last week’s rebound; nickel declined for two weeks; zinc and lead rose for two weeks; aluminum, after two weeks of gains, declined.
• LME copper fell 2.76%, to $13,555 per ton, down 0.13% for the week. LME tin declined 4.22%, to $52,347 per ton, down 2.84%. LME nickel fell 2.13%, to $18,497 per ton, down 2.09%. LME aluminum declined 2.57%, to $3,563 per ton, up 1.71%. LME zinc dropped about 1.4%, to $3,534 per ton, up 3.03%. LME lead declined 1.79%, to $1,978 per ton, up 0.15% for the week.

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