2026.5.11 US Stock Brief | Oil Hits 104, Indexes Still Set Three New Highs

S&P 500 closed at 7,412.84, up 0.19%. Nasdaq at 26,274.13, up 0.10%. Dow at 49,704.47, up 0.19%. All three indexes simultaneously set new all-time closing highs. VIX rose 6.92% to 18.38. The 10-year Treasury yield climbed roughly 1bp to 4.41%. WTI crude settled at 98.07, up 2.78%. Brent broke above $104, up 2.9%.

Oil prices surging without dragging down equities was Monday’s most counterintuitive move. Energy XLE led the way, up 2.64%, followed by Materials XLB up 1.30%, Tech XLK up 1.34%, and Industrials XLI up 1.06%. Communication Services XLC fell 1.16% to the bottom, with Consumer Staples XLP down 0.96% and Consumer Discretionary XLY down 0.69%. What rallied was cyclical; what dropped was consumer-facing. Money was using inflation plays to prop up the indexes.

The catalyst for the oil spike was the US-Iran talks hitting an impasse. WSJ and Reuters both framed it as “war with Iran threatens to drag on.” Brent broke through 104, with global oil reserves drawn down by roughly 1 billion barrels over the past two months (Morgan Stanley data). On Polymarket, the probability of a permanent US-Iran deal before May 15 sits at 2%, Strait of Hormuz returning to normal transit before May 15 at 0%, and Iranian regime change before May 31 at 2%. All three probabilities zeroed out any market expectation for a near-term diplomatic breakthrough, which paradoxically gave oil more room to run higher. The Pentagon estimates the cost of the Iran conflict has already reached $29 billion.

The bond market applied pressure in tandem. The US Treasury auctioned $42 billion in 10-year notes on Monday, with a high yield of 4.468% — up 19bp from the previous 4.282% — and a bid-to-cover ratio of 2.40 versus 2.43, showing lukewarm demand. VIX up nearly 7% while indexes set three new highs — this combination typically signals tail-risk hedging is being bought, with the immediate backdrop being April CPI data due Tuesday.

China was the other storyline. China’s Ministry of Foreign Affairs confirmed Trump will visit from May 13–15, with a CEO delegation including Nvidia’s Jensen Huang, Apple’s Tim Cook, Boeing, Qualcomm, ExxonMobil, Blackstone, and Citi. The delegation’s scale is on full display, but the substantive deals that can actually get signed may be limited. The market is pricing this visit more as political theater — energy terms are the most likely focus.

A few peripheral signals worth noting. FDA Commissioner Marty Makary resigned on Monday. A US appeals court temporarily stayed the Court of International Trade’s ruling against the 10% universal tariff, meaning Trump’s tariff framework won’t be overturned in the near term. US Treasury data shows $35.5 billion in tariff refunds have been processed as of May 11. The UK announced it will deploy drones, fighter jets, and warships to join the multinational security operation in the Strait of Hormuz. JPMorgan CEO Dimon said in London that if the UK keeps raising bank levies, JPM will abandon its plans for a new London headquarters.

Tomorrow’s CPI is the most important variable this week. If inflation comes in mild, the 10-year can hold near 4.40%, and the energy-led cyclical rally has room to continue. If CPI comes in hot, bond yields above 4.50% combined with the Iran negotiation deadlock would turn today’s sector rotation into the starting point of a broad growth-stock pullback.