MW Stocks tumble, bond rout deepens as Trump's China visit fails to reopen Strait of Hormuz
By Isabel Wang and Joy Wiltermuth
Wall Street's 'fear gauge' surges 8% as global oil prices reclaim $108 a barrel and the 10-year Treasury yield breaks above 4.5%
Investors are worried about consumers and the economy after this week's hot inflation readings and lack of a deal to reopen the Strait of Hormuz.
U.S. markets were selling off broadly and global oil prices were reclaiming $108 a barrel as hopes for an end to the Iran conflict faded after President Donald Trump failed to secure a commitment from China to help pressure Iran to reopen the Strait of Hormuz.
The leaders of the world's two biggest economies wrapped up the high-stakes U.S.-China summit in Beijing on Friday, but there was little indication that Trump had gained Chinese leader Xi Jinping's help to persuade Iran to reopen the crucial waterway.
"There were expectations of something coming out of the Xi meeting with Trump," said Mike Sanders, head of fixed income at Madison Investments. After this week's hot inflation data, a new realization is setting in that a quick resolution looks further away than many expected, he said.
Trump said he had struck "fantastic trade deals, great for both countries," but few details have emerged.
See: Trump's China visit could rattle markets if it doesn't bring an Iran breakthrough
The lack of concrete developments from the U.S.-China summit had investors on edge Friday morning. U.S. stocks were tumbling across the board, with the S&P 500 SPX off 0.9%, while the Dow Jones Industrial Average DJIA was falling 0.8% and the Nasdaq composite COMP was slumping 1.2%, according to FactSet data.
West Texas Intermediate crude saw its June contract (CL.1) (CLM26) rise 2.8% to $104.06 a barrel, while Brent crude futures for July delivery (BRN00) (BRNN26) advanced 2.6% to $108.50 a barrel, according to FactSet data. The global oil benchmark is also on pace for its highest settlement level since May 5.
For the week, Brent crude futures have risen nearly 7% and on Friday were headed for their largest weekly gain since late April. The U.S. benchmark was up nearly 10% so far this week, according to Dow Jones Market Data.
The Cboe Volatility Index VIX, better known as the VIX or Wall Street's "fear gauge," was rising over 8% to its highest level in over three weeks, though it remained below its long-term average of around 20.
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Investors were ditching U.S. government bonds amid intensifying concerns that the resurgence of inflation brought on by the Iran war could force the Federal Reserve to pursue higher interest rates.
The chances of at least one rate hike this year were near 50%, according to the CME FedWatch Tool.
"I don't see how the Fed can justify hiking rates in the face of rising energy prices," Sanders said. Eventually, if oil prices around $100 a barrel are sustained, consumers and the economy will likely face damage, he said.
The 30-year Treasury yield BX:TMUBMUSD30Y this week topped the 5% threshold, the benchmark 10-year yield BX:TMUBMUSD10Y on Friday reclaimed the 4.5% level for the first time since June 2025, and the policy-sensitive 2-year yield BX:TMUBMUSD02Y climbed above 4%, also for the first time in 11 months. Bond yields move in the opposite direction of prices.
-Isabel Wang -Joy Wiltermuth
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(END) Dow Jones Newswires
May 15, 2026 10:28 ET (14:28 GMT)
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