Marta Lavandier
Gas prices are displayed at a Westar gas station in Miami, Tuesday, May 12, 2026. (AP Photo/Marta Lavandier)
Stocks were trending downward on futures markets Monday morning while the price of oil was rising, as a deal to open the Strait of Hormuz remains elusive and the summer driving season in the U.S. beckons.
Dow Jones Industrial Average futures were off by more than 150 points, and the global price of a barrel of oil resumed its climb above $110 a barrel. The price of a gallon of gasoline, meanwhile, hit $4.52, roughly in line with a week ago.
On Wednesday, the Federal Reserve will release its minutes of the central bank’s late April meeting on interest rates. The Fed held rates unchanged then, but markets are beginning to sense that the next move might be an increase, not a cut as had been widely expected just a few months ago.
Much is riding on the outcome of the conflict in the Middle East, with President Donald Trump once again threatening Iran on Monday. Trump warned the “clock is ticking,” adding, “They better get moving, FAST, or there won’t be anything left of them,” in a post on his Truth Social platform. “TIME IS OF THE ESSENCE!”
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Trump visited China late last week and met with Xi Jinping but came away empty in terms of promises of help the Asian nation could provide in ending the conflict. China is a leading purchaser of Iranian oil.
Concerns are growing that oil prices could remain higher throughout the summer with supplies becoming scarce in Europe. Higher gas prices have contributed to surging inflation in the U.S., with the consumer price index in April hitting an annual rate of 3.8% – the highest level since 2023. Another gauge of wholesale inflation found it had soared to a 6% annual rate, the highest since 2022.
On Friday, the University of Michigan will update its May consumer sentiment survey that will show how Americans see inflation 12 months from now. Also that day, the Conference Board will issue its index of leading economic indicators for April, with expectations it will show a small decline.
But it is inflation that is the main focus at the moment.
“The lack of any deal around Hormuz, however, is a disappointment to financial markets, and expectations of a future energy crisis are starting to look more realistic, particularly as we are entering the driving season, summer holidays will start to get underway, and energy stocks are dwindling,” Richard de Chazal, macro analyst at William Blair wrote Monday in his weekly market outlook.
“Inflation is clearly broadening across the board,” he added, noting that the bond market has been pricing government debt higher. “Undoubtedly, the actions in the bond market, with 10-year yields rising from 4.36% to 4.62% and 2-year yields increasing from 3.89% to 4.10%, are viewed as a troubling sign that the Fed needs to be responding to. The bond sell-off is also global, as investors are taking a dimmer view on the closure of the strait and its likely inflationary impact.”
Higher yields are also affecting the housing market, as mortgage rates stay firmly in the 6%-plus range, dampening sales activity. The National Association of Realtors will issue its index of pending home sales for April on Tuesday, followed by twin reports on building permits and housing starts on Wednesday. None of the data is expected to show much movement in the stalled housing market.
For the stock market – and the economy overall – Wednesday will also bring a gut check when tech juggernaut Nvidia releases its quarterly earnings. The stock has been a bellwether for the tech-driven market in recent months.
“Nvidia’s earnings are the ultimate test for a stock market that is not only trading at record highs, but one that also had a breathtaking bounce off of the March lows, as Nvidia is the market’s shorthand for everything AI and this market’s gains have been driven in large part by AI over the past few years,” Richard Reyle, chief investment officer at Questar Capital Partners, wrote in an email Monday.
“Heading into Nvidia’s Wednesday earnings report, we already know the numbers will be stellar given all of the (capital investment) spending that has been reported by the hyperscalers in recent weeks,” he added. “Stellar earnings for Nvidia doesn’t necessarily point to much further upside in the stock. To say that Nvidia is priced for perfection is an understatement.”
