Wall Street Sinks as Oil Tops $110 and 10-Year Yield Brushes 4.6% Ahead of Make-or-Break Nvidia Earnings

NEW YORK — U.S. stocks opened a high-stakes week sharply in the red on Monday, with Dow futures off more than 350 points, the S&P 500 down 0.5%, and the Nasdaq 100 off 0.4%, as a drone strike on a UAE nuclear plant pushed crude oil above $110 a barrel and bond yields back toward a 17-year high.

The 10-year Treasury yield brushed 4.6% in early trading before easing back to 4.58%, while the 2-year climbed to 4.92%, its highest level since November. "Investors are getting whiplash," said Liz Young Thomas, head of investment strategy at SoFi. "You have a hot inflation print, a Fed governor openly talking about a rate hike, an oil shock from the Gulf, and a megadeal in the utility space all colliding on a Monday morning." Brent crude topped $110.36, its highest settle since the 2022 invasion of Ukraine, while West Texas Intermediate crossed $106.

The market mood comes off a record-setting week in which the S&P 500 closed at an all-time high of 6,827 on Friday, lifted by enthusiasm around artificial intelligence capital spending and stronger-than-expected earnings from retailers Walmart and Home Depot. That rally now faces its sternest test of the year: Nvidia, which alone accounts for roughly 7% of the S&P 500's market capitalization, reports fiscal first-quarter results after the bell on Wednesday. Analysts polled by FactSet expect revenue of $44.3 billion and adjusted earnings per share of $0.91, both of which would be records. Options markets are pricing an implied move of plus or minus 9% on the stock the morning after, a swing that would by itself add or subtract roughly 95 points from the S&P 500.

Outside of the chip giant, the macro calendar is unusually heavy. Federal Reserve Chair Jerome Powell delivers the commencement address at Princeton on Tuesday, his last scheduled remarks before the June 10-11 Federal Open Market Committee meeting. Minutes from the May FOMC meeting hit Wednesday afternoon. The Philadelphia Fed's Survey of Professional Forecasters has nearly doubled its second-quarter CPI estimate to 6.0%, and one-year consumer inflation expectations measured by the University of Michigan have hit a 40-year high. Fed Governor Kevin Warsh said on CNBC last week that "the case for resuming rate hikes is no longer a fringe view inside the building."

Deal news provided one of the few bright spots. Dominion Energy surged 14.3% premarket on a Bloomberg report that NextEra is in advanced talks to acquire the Richmond-based utility for roughly $400 billion, a move that would create the largest power company in U.S. history and consolidate generation in the data-center belt running from Northern Virginia to the Carolinas. Bitcoin slipped 2.8% to $112,400 as risk appetite dried up; gold pushed up 1.2% to a record $3,498 an ounce. "In a week like this, you want barbells: short-dated Treasuries on one end and gold on the other," said Mohamed El-Erian, the Allianz chief economic advisor.