By Ragini Mathur and Utkarsh Hathi
May 18 (Reuters) – U.S. stock index futures edged lower on Monday as rising Treasury yields and oil prices weighed, while investors awaited key earnings from Nvidia and Walmart later in the week.
The benchmark 10-year Treasury yield, which moves inversely to prices, rose as high as 4.631% earlier in the day, its highest level since February 2025, before easing slightly to 4.607%. [US/]
The bond-market selloff was fueled by a surge in oil prices, which has stoked concerns that inflation could keep borrowing costs elevated. Brent crude futures were trading at $110.66 a barrel after efforts to end the Iran war appeared to stall following a drone strike on a nuclear power plant in the United Arab Emirates.
“The concern for investors is that higher yields do not stay confined to bond markets. They can weigh on equity valuations, particularly in growth and technology sectors, while also increasing pressure on governments carrying large debt burdens,” said Lale Akoner, global market strategist at eToro.
Wall Street had rallied sharply in recent weeks, with the benchmark S&P 500 and the tech-heavy Nasdaq reaching record highs as enthusiasm around artificial intelligence helped investors look past the inflationary threat from soaring oil prices.
That optimism faded with Friday’s bond market rout. Traders are now pricing in a more than 40% chance the U.S. Federal Reserve will raise interest rates in January, according to CME’s FedWatch tool, after last week’s hotter-than-expected inflation readings.
At 7:19 a.m. ET, Dow E-minis were down 322 points, or 0.65%, and S&P 500 E-minis were down 30.5 points, or 0.41%. Nasdaq 100 E-minis were down 112 points, or 0.38%.
Investors will also watch the minutes of the Fed’s meeting, which are due on Wednesday, and the transition at the central bank, with former Governor Kevin Warsh set to be sworn in as chair. He is expected to face an early test in balancing the White House’s calls for lower borrowing costs against a more hawkish tone from Fed officials.
Corporate earnings remain another crucial test for markets. Nvidia, the world’s most valuable company, is scheduled to report results on Wednesday, as a strong first-quarter earnings season draws to a close.
Expectations are high for the company, whose shares have risen 36% from a March low, while the Philadelphia SE Semiconductor Index has surged more than 60% this year on strong demand for AI-related chips.
Walmart, the largest retailer in the world, is also expected to report earnings this week that could offer a clearer picture of how U.S. consumers are coping with higher energy prices and broader inflation pressures.
Among premarket movers on Monday, Dominion Energy jumped 14.2% after Bloomberg News reported power firm NextEra Energy was discussing a mostly stock deal for the smaller utility that would value it at about $76 per share, or around $66 billion.
UnitedHealth Group fell 4.7% as Berkshire Hathaway said it had sold many of its smaller stock holdings, including in the health insurer.
Shares of Regeneron fell 11.8% after the drugmaker’s experimental treatment missed the main goal in a late-stage trial in patients with advanced melanoma, a type of skin cancer.
(Reporting by Ragini Mathur and Utkarsh Hathi in Bengaluru; Editing by Pooja Desai and Maju Samuel)
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