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Stocks Mixed as Higher Crude Prices Boost T-Note Yields

The S&P 500 Index ($SPX) (SPY) today is up +0.05%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.02%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.15%. September E-mini S&P futures (ESU26) are up +0.03%, and September E-mini Nasdaq futures (NQU26) are down -0.17%. Stock indices are mixed today. The broader market is under pressure today from higher crude oil prices, which are boosting inflation expectations and T-note yields. WTI crude oil is up more than +2% today, pushing the 10-year T-note yield up by +4 bp to 4.69%.Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily. Losses in stock indices are limited today by strength in energy providers, software stocks, and cybersecurity companies. Also, optimism in AI spending is supportive for stocks after Taiwan Semiconductor Manufacturing Co. (TSMC), a bellwether for AI spending that produces the vast majority of the world’s most advanced chips, reported today that its July sales rose 45% y/y, a sign of sustained demand for its AI hardware. JPMorgan Chase & Co. raised its year-end projection for the S&P 500 to 8,000 from 7,800, saying a strong earnings season and faster AI monetization than expected are boosting profit estimates. The outlook for strong Q2 earnings is a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2. So far, earnings results have been positive, with 85% of the 444 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. Sep WTI crude oil prices (CLU26) are up more than +2% today as Iran and Oman remained short of a deal to reopen the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi said an agreement with Oman to establish a shipping route through the strait was "very close," but its reopening would require the US to end its blockade of Iranian shipping, withdraw its forces from around Iran, remove sanctions, release frozen assets, and compensate Iran for damages caused by US attacks. It also demanded a permanent end to attacks on groups it backs in Lebanon, Iraq, Yemen, and Gaza. President Trump on Sunday signaled he's prepared to let economic pressure on Iran build rather than launch additional military strikes, saying the US was only "semi-negotiating" with Iran on the Strait of Hormuz and that the US blockade of Iran was deepening the country's financial woes. The risk of a renewed flare-up across the Middle East remains high, as another UAE tanker was targeted by a missile on Saturday while transiting the Strait of Hormuz. Also, on Sunday, Houthi militants in Yemen claimed an attack on Saudi Arabia's Jazan refinery. The markets are discounting a 47% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16. Overseas stock markets are higher today. The Euro Stoxx 50 is up +0.22%. China's Shanghai Composite climbed to a 3.5-week high and closed up +0.672%. Japan's Nikkei-225 Stock Average rallied to a 2-week high and closed up sharply by +2.08%. Interest Rates September 10-year T-notes (ZNU6) are down -6 ticks today. The 10-year T-note yield is up +4.5 bp to 4.690%. T-notes are under pressure today from a more than +2% rise in WTI crude oil prices, which boosts inflation expectations. Also, supply pressures are weighing on T-note prices as the Treasury will auction $125 billion of T-notes and T-bonds this week, beginning with a $58 billion auction of 3-year T-notes on Tuesday. European government bond yields are moving higher today. The 10-year German bund yield climbed to a 1-week high of 3.17% and is up +4.3 bp to 3.175%. The 10-year UK gilt yield is up