Rising interest rates undercutting stock market

Briefing.com Summary:

*Global bond yields are up sharply and causing problems for global equity markets.

*The Trump-Xi summit was long on civil discourse, but short on deliverables.

*The Cerebras Systems IPO stirred concerns about a near-term top being reached.

The equity futures market has a notably negative disposition this morning, and there are a number of reasons why. Currently, the S&P 500 futures are down 91 points and are trading 1.2% below fair value, the Nasdaq 100 futures are down 525 points and are trading 1.8% below fair value, and the Dow Jones Industrial Average futures are down 462 points and are trading 0.9% below fair value.

We are going to start at the top (literally) with explanations for why the tide has turned.

Yesterday, the S&P 500 and Nasdaq Composite stretched further into record territory, catalyzed once again by AI enthusiasm that was due in part to Cisco’s (CSCO) earnings report and outlook and optimism that NVIDIA (NVDA) might soon be selling more of its H200 chips in China, but mostly to the wildly successful IPO of Cerebras Systems (CBRS), which priced at $185.00 per share, opened at $350.00, went as high as $386.34, and closed at $311.07.

That was an IPO for the dot-com ages; only we are in the AI age now, and it stirred concerns that the latest AI rally, and tech rally, is at a topping point.

That is one factor adversely affecting market sentiment. Another important factor that is more fundamental in nature is the jump in Treasury yields, which has mirrored the jump in yields seen in other sovereign bond markets.

The 2-yr note yield is up seven basis points to 4.06%, the 10-yr note yield is up nine basis points to 4.55%, and the 30-yr bond yield is up nine basis points to 5.10%. Those moves have coincided with rising oil prices, which, in turn, have coincided with the understanding that the Trump-Xi summit did not result in any breakthrough for ending the Iran war or the blockade of the Strait of Hormuz.

The worry, for some, is that the U.S. might step up its military campaign again, but even if it didn’t, the worry for most is that this is turning into a prolonged affair that will keep oil prices elevated and a worsening factor for inflation.

WTI crude futures are up 3.1% to $104.35/bbl, and Brent crude futures are up 2.3% to $108.17/bbl.

Turning back to the summit, there is an appreciation for the fact that President Trump and President Xi engaged in a civil discourse, yet there is a festering sense of disappointment that this meeting was short on deliverables and infused with a heightened sense of uncertainty about China’s plans for Taiwan.

Reports today indicate President Xi asked President Trump if the U.S. would defend Taiwan militarily, but President Trump himself said he didn’t respond and moved on to a different topic. He also said in an Air Force One press conference that NVIDIA’s H200 chips did not come up in conversations with President Xi, that he didn’t ask President Xi for any favors on Iran, and that China will be ordering approximately 200 planes from Boeing (BA).

The two leaders might meet again in September in Washington, D.C.

At the moment, the market is meeting with some real resistance in the form of rising bond yields. That is true elsewhere, too. South Korea’s KOSPI Index plummeted 6.1%, with worries about a possible strike at Samsung Electronics exacerbating its slide. Japan’s Nikkei fell 2.0%, and major bourses in Europe are down in the neighborhood of 1.5% to 2.0%.

It will be a rough opening here, partly because it has been so smooth (perhaps too smooth) for the AI-driven tech trade, and rising interest rates are largely to blame.

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Originally Posted May 15, 2026 – Rising interest rates undercutting stock market