Ashley Mastronardi: Eric Criscuolo, Market Strategist for the New York Stock Exchange. Eric, so great to see you.
Eric Criscuolo: Ashley, great to see you.
Ashley Mastronardi: All right, so we have a lot of stories playing out in the market. Treasury yields, oil prices, tech stocks. What is your takeaway from today's session?
Eric Criscuolo: Yeah, it was a very interesting day, right? Everything was kind of doing as it has been, right? Oil up, yields up early in the morning.
Then we got news, though, from OpenAI saying that their revenue run rate is going to come in about $20 billion less than what everyone had thought it was running at. So that really hit the tech sector.
The AI trade kind of fell apart today. Everything just got hit across the board. Anything connected to the AI trade, tech absolutely, but even some of the data centers, some of the electrical names that are plugging into the data centers and feeding the energy in there. Everything within that whole group just got hit hard.
Oil continued to move higher. Okay, not too surprising there. But what was surprising was that Treasury yields, as you were talking about, started to move lower, and they kept moving lower throughout the day, especially on the long end. So the 10-year, the 30-year, those are starting to come in.
Now, everyone was really worried about how high they were getting. They're starting to come in now. So the market, maybe we saw the level where buyers were like, you know what? If I can lock in this yield for 10 and 30 years, I'm going to do it now.
We'll have to see if this continues. But for now, for one day, there was a reprieve on the long end, and the rest of the market kind of liked that. So the S&P higher on the day.
Ashley Mastronardi: Some say that the bond market is the foundation of financial markets. When we see these yields rise, what kind of chain reaction does it have?
Eric Criscuolo: Yeah, I mean, everything else gets priced off of Treasury yields, right? Stocks get priced off Treasury yields. Commodities react to Treasury yields because it's the price of money, right?
Treasury yields, the interest rate, it's the price of money. So that affects everything.
And so when you look at stock valuations, those are generally valued in reference to what can I get? What do I think a stock is going to do over the next one to five years versus what I know I can get in a Treasury yield over one or five years?
So that relationship is kind of what creates a lot of the movement or the valuation for stocks when investors reference that. So as those yields move, that's going to impact everything else asset-wise.
Ashley Mastronardi: Also, another big impact to our markets is oil prices. We're seeing them up sharply. They were under $100 a barrel just last week.
You know, this after Donald Trump said that he does not plan to make a deal with Iran. There will be more strikes. How powerful is what the White House is saying about this war on markets?
Eric Criscuolo: Yeah, I mean, generally speaking, the market just wants this war to end. They want some kind of finality. They want things to settle back down. They want the Strait to reopen, right? That's kind of what markets want. That's why oil is so high.
It just doesn't feel like there's anything close to a final solution or an endgame right now. So that's why oil is now over $104, even over $100.
You know, President Trump saying that I'm not going to do strikes before the midterms, so that was great. But then he said, you know, I don't really know what's going to happen, but maybe after midterms I'll do them.
So that's why oil continued to move higher, because we just don't see how we can get out of this situation just yet.
Ashley Mastronardi: Do you think if oil continues to rise and bond yields stay over 5%, do you think that will have an impact on the Fed's next rate cut decision?
Eric Criscuolo: Yeah, I mean, I think that they want to see that inflation number continue to tick down. And if oil is still elevated, that just feeds into every other price measure that we have, whether it's gasoline, obviously, but also just how much does plastic cost to produce, because all those petrochemicals come from oil.
So it feeds into everything else. The Fed is going to probably at least keep rates high. I don't think there's any thoughts of cutting them anytime soon.
Whether they raise rates once or twice or three times over the next six, eight, 12 months, that remains to be seen. But it just seems like rates are going to be higher for longer.
Ashley Mastronardi: Great. Eric Criscuolo, Market Strategist at the New York Stock Exchange. Thanks for joining us, as usual.
Eric Criscuolo: Always a pleasure, Ashley. Thank you.
