Tech Still Struggling, but Yields, Oil Slip Early

Published as of: May 19, 2026, 9:10 a.m. ET

(Tuesday market open) Major indexes slid for the third straight day as tech shares weakened again early even as crude and Treasury yields eased. Home Depot (HD) fell despite earnings that topped expectations, while geopolitics stayed in the spotlight after President Trump said yesterday he'd postponed an attack on Iran planned for today to let negotiations continue.

In a switch from last week when tech stocks tracked higher and the broader market slipped, the S&P 500 Equal Weight Index (SPXEW) outpaced the S&P 500 Index Monday. Major indexes mostly retreated for the second straight day, sunk by tech again as market participants appear to be consolidating positions ahead of Nvidia's (NVDA) eagerly awaited earnings tomorrow afternoon. Friday and Monday were the worst two-day stretch for chips since last October, when selling ignited a dramatic rotation out of tech and into sectors that had long gone unappreciated.

The equal weight index weighs all components the same rather than by market capitalization, making it less reflective of mega-cap performance. Though it outpaced the S&P 500 Index yesterday, its weakness over the last two months suggests vulnerability if mega caps dive, with only 2% of S&P 500 stocks at 52-week highs. Only 5% are at four-week highs. "We have seen this narrowness and a lot of really rapid-fire rotation and churn under the surface," said Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research (SCFR) on CNBC yesterday. "This is a scenario that could persist in the near term."

1. Rush week for Warsh? The market appears to already be subjecting Kevin Warsh to some discomfort before he's sworn in as Fed chairman this week; Treasury yields hit nearly one-year highs last Friday and again Monday. "Either the bond market or the stock market—sometimes both—tend to test a new Fed chairman," my colleague Sonders said Monday. Uncertainty in Treasuries could reflect Warsh's different and arguably more dovish views on inflation, starting with his positive comments about the trimmed mean Personal Consumption Expenditures (PCE) inflation—in which a certain fraction of the most extreme observations at both ends are thrown out or trimmed. "But the rub there is that those have been rising as well," Sonders told CNBC, adding that Warsh has also argued AI-related productivity gains could lead to cuts in short-term rates. "I'm not sure how quickly he's going to be singing that tune in light of the fact that neither of the Fed's dual mandates are suggesting anything resembling rate cuts or easier policy."
    
2. Nvidia still left out of China, for now: One item investors might monitor on Nvidia's earnings call tomorrow is its chip business with China, which is practically non-existent. Last week, Reuters reported that several Chinese firms are now authorized to take shipments of Nvidia's less-advanced H200 chips. But yesterday, Nvidia CEO Jensen Huang told Bloomberg TV he hadn't discussed H200 chips with Chinese officials. While the U.S. seems inclined to let Nvidia sell those chips there, Beijing has pushed domestic companies not to buy U.S. chips. With no progress emerging from last week, it seems that Nvidia is unlikely to guide for any chip sales to China, which once accounted for 13% of its revenue. Another question is how strong earnings need to be for Nvidia's stock to benefit. As some analysts point out, Nvidia had an arguably solid quarter last time out only to see shares fall after earnings. Often, gross margin is a deciding factor. It was solid last time out at 75%, but any margin decline—or guidance that suggests a decline—might raise concerns that competition is weighing on prices.
    
3. AI profits—will companies keep or share? In South Korea, a lawmaker suggested the government share excess revenues collected from corporate AI profits via a citizen dividend, and Samsung's union is demanding 15% of the company's operating profit be paid in a bonus that would be formalized in employment contracts. The idea of AI profit sharing isn't just a Korean one—OpenAI's Sam Altman has also suggested a national public AI wealth fund. "The question is if corporate profitability is at risk over the intermediate term," said Michelle Gibley, director of international equity research and strategy at SCFR.

• Home Depot inched lower ahead of the open despite posting earnings per share slightly above consensus and revenue that met expectations. Demand in the fiscal first quarter was similar to demand in the previous fiscal year, Home Depot's CEO said in the press release, though he cited "consumer uncertainty and housing affordability pressure." The company restated prior guidance. Shares may be seeing headwinds from a small 0.6% annual rise in sales at stores open a year or more and the volume of transactions at those stores falling 1.3%, Briefing.com observed.
   
• Micron (MU) was down 2% early after plunging nearly 6% yesterday. SanDisk (SNDK) and Western Digital (WDC) fell another 3% this morning after losing more than 5% Monday. The selling might have represented profit taking from the recent rally, though there was news, too. Seagate (STX), which fell 7% yesterday, said it would take too long to build new factories to keep up with rising memory demand, Bloomberg reported.
   
• Even as chip stocks sagged early, software names went the other direction, led by nearly 5% pre-market gains for ServiceNow (NOW). Lately, software has generally risen when chips fall, and vice versa. Several key software names report in the next week or two, including Salesforce (CRM).
   
• Blackstone (BX) and Alphabet (GOOGL) both rose nearly 1% this morning after the two companies announced a joint venture to create a new AI cloud company using Google's specialized chips, The Wall Street Journal reported. This would likely compete with CoreWeave (CRWV), shares of which tumbled 4% this morning. The unnamed company would be launched with $5 billion in equity capital from Blackstone.
   
• Lumentum (LITE) sagged more than 8% Monday, caught up in the overall AI struggles. Others falling included CoreWeave (CRWV), Marvell Technology (MRVL), and Oracle (ORCL), as the PHLX Semiconductor Index (SOX) descended 3% on top of the 4% loss it recorded Friday. The SOX is still up nearly 59% year-to-date.
   
• Checking momentum, the S&P 500's relative strength index, or RSI, backed off from last week's peaks near 77 to around 66 by late Monday, a sign of possible reluctance by participants to push the market higher. An RSI above 70 is considered to suggest overbought conditions.
   
• Treasury yields eased slightly today but the 10-year yield remained above 4.6% and the 30-year yield stayed above 5.15%, threatening levels last touched in early 2025. Higher bond yields are hurting stocks, with Goldman Sachs noting that the correlation between equities and bonds has reached the most negative levels since the 1990's.
   
• Market breadth continues to backtrack early this week. As of Monday, less than 50% of S&P 500 stocks traded above their 200-day moving averages. The S&P 500 Index came so far so fast on its rally that technical support remains well below current levels, near 7,030. The 50-day moving average is almost 100 points below that.

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The 10-year Treasury yield (TNX:CGI—candlesticks) pushed through a resistance line (red line) to a one-year high. The resistance line extended down from the late-2023 high near 5% and the early 2025 high near 4.75%. Though it might take a few days of trading at these levels to confirm the technical move, it could be significant in allowing yields to re-test first the 2025 and then perhaps the 2023 peaks.

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

May 20: FOMC minutes and expected earnings from Nvidia (NVDA), Analog Devices (ADI), TJX Companies (TJX), Lowe's (LOW), Williams-Sonoma (WSM) and Intuit (INTU).
May 21: Expected earnings from Walmart (WMT), Deere (DE), Ralph Lauren (RL), Ross Stores (ROST), Zoom (ZM), and Decker's Outdoor (DECK).
May 22: Final May University of Michigan Consumer Sentiment.
May 25: U.S. markets closed for Memorial Day Holiday.
May 26: May consumer confidence and expected earnings from AutoZone (AZO) and Zscaler (ZS).