Markets Hold Highs as TEFS Competition Starts 18/05/2026

 


HOT stories for today

Market wrap:

• Global stocks came under pressure Friday as a sharp rise in sovereign bond yields weighed on risk appetite and triggered a pullback in technology shares. The U.S. 30-year Treasury yield climbed to its highest level in roughly a year, while long-dated bond yields in the U.K. and Japan also surged, with Britain’s 30-year Gilt yield reaching levels not seen since the late 1990s. The bond-market selloff added pressure to equities already facing elevated oil prices and renewed geopolitical uncertainty tied to the Iran conflict. President Donald Trump warned Sunday that Iran needed to “get moving, FAST” on negotiations or there “won’t be anything left,” intensifying fears of further escalation and potential disruptions to global energy supplies. 
• Technology shares, which had driven much of the market’s recent record-setting rally, led the decline as higher yields hit growth-stock valuations. The Nasdaq-100 dropped 1.5% Friday, marking its worst one-day performance since late March. Markets were also digesting hotter inflation data released last week, which further reduced expectations for near-term Federal Reserve rate cuts and reinforced concerns that elevated energy costs may continue feeding into broader inflation pressures. The cautious tone carried over to Asia-Pacific markets Monday, where stocks fell as investors balanced geopolitical risks against the prospect of tighter global financial conditions. Attention now turns to a crucial week for corporate earnings. NVIDIA reports on Wednesday, alongside Target, while Walmart is due Thursday, with investors looking for signs that consumer demand and AI-related spending remain strong enough to support lofty equity valuations despite rising macro risks.

Options Frenzy Is Fueling Wall Street’s Rally

• Wall Street’s powerful rebound from the spring selloff is increasingly being driven not just by earnings optimism, but by a massive surge in options trading that some strategists say resembles late-stage dot-com bubble dynamics.  After fears around inflation, higher oil prices, and the Iran conflict pushed the S&P 500 close to correction territory in March, stocks have staged a remarkable comeback. The index still managed to post a seventh straight positive week despite Friday’s sharp selloff. Strong earnings have helped fuel the rally, with first-quarter S&P 500 profit growth tracking near 28%, the fastest pace since late 2021. But beneath the surface, Wall Street increasingly believes derivatives markets are amplifying the move higher. Heavy buying of bullish call options, particularly short-dated 0DTE contracts,  has triggered what traders describe as a powerful “gamma squeeze,” forcing market makers to buy stocks and index futures as markets rise.
• The Squeeze Metrics Gamma Index recently climbed to its highest level since 2021, while several derivatives strategists described current positioning as historically stretched. Some analysts warn that gains driven heavily by options flows could reverse quickly if sentiment shifts. Wall Street is also watching signs of increasingly concentrated positioning in AI and semiconductor names, including Micron Technology (MU) and Broadcom (AVGO). Measures of market correlation have fallen sharply, reflecting how investors are crowding into a narrow group of high-momentum tech trades while broader macro risks remain elevated. For now, strong earnings and AI-related optimism continue to support equities. But rising bond yields, persistent inflation concerns, and geopolitical tensions are beginning to test whether the rally can keep outrunning the growing risks underneath the surface.

Stocks on the move:

• Microsoft (MSFT): Shares rose nearly 4% after Pershing Square’s Bill Ackman said he had been building a position in the software giant, calling its valuation “highly compelling.”
• ServiceNow (NOW): Shares gained nearly 5% after the AI platform company announced a multiyear partnership with Experian to develop autonomous AI agents.
• Ford (F): Shares fell about 7% after a recent rally tied to its battery storage ambitions. Analysts said the move appeared driven more by AI-related enthusiasm than near-term fundamentals.
• Applied Materials (AMAT): Shares slipped about 2% despite beating fiscal second-quarter earnings and revenue estimates.
• Cerebras Systems (CBRS): Shares fell 5%, giving back some gains after soaring 68% in its Nasdaq debut.
• Starbucks (SBUX): Shares edged up less than 1% after the company announced plans to cut about 300 U.S. corporate jobs.

Watchlist: MSFT, AMAT, MRVL, ARM, MU, NVDA, XOM, CRBS

Key Economic Events Today:

EST time

10:00 am: USD NAHB Housing Market Index



Earnings

BMC (Before Market Open): Baidu (BIDU), Ryanair (RYAAY), Brady Corp. (BRC), IQIY Inc. (IQ)

AMC (After Market Close): XP Inc (XP), Agilysys Inc. (AGYS)


 

The TEFS Analyst team wishes you a successful day!