U.S. stock futures fell sharply on Thursday after the major averages fell in the previous session, as strong economic data, a weak Treasury auction and renewed inflation concerns tied to energy prices pushed Treasury yields to multi-decade highs. On Wednesday, the Dow fell 0.68%, the S&P 500 declined 0.75% and the Nasdaq Composite dropped 1.13%, with ten of the 11 S&P sectors ending lower, led by communication services, utilities and consumer discretionary.
Traders may also stay tuned to the outcome of the summit between U.S. President Donald Trump and his Chinese counterpart Xi Jinping.
The benchmark 10-year U.S. Treasury yield climbed to around 5.133%, its highest level since May 2007, extending a bond sell-off that followed S&P Global PMI data showing strong new orders and multi-year highs in input and output price inflation, fueling expectations of another Federal Reserve rate hike this year.
Premarket Snapshot
Global markets at a glance
| Instrument | Level | Change |
|---|---|---|
| S&P 500 futures | 7,723.50 | -0.63% |
| Dow futures | 51,705.00 | -0.32 |
| Nasdaq 100 futures | 30,444.50 | -1.04%% |
| 10-Year Treasury Yield | 5.127% | at multi-decade high |
| WTI Crude | $93.26 | +1.19% |
| Brent Crude | $104.78 | +1.67% |
| Gold Futures | $4,279.50 | -0.90% |
| Dollar Index (DXY) | 101.29 | +0.19 |
| VIX | 16.41 | +8.10% |
| Bitcoin | $83,395.06 | -2.92% |
MarketFramework's Positioning Edge tool shows that the sell-off in Nasdaq E-mini futures (NQ) has been accompanied by an extreme bullish positioning divergence, with 76% of profitable traders long versus just 28% of unprofitable traders. The 48-percentage-point gap suggests the profitable side remains positioned for a rebound even as the index comes under heavy selling pressure.
US Stocks in Focus
Hyperscalers and chip stocks that are in the forefront of the artificial intelligence (AI) revolution extended their losses as rising yields meant a higher rate used to discount their future cash flow, putting further pressure on lofty valuations.
Cryptocurrency-linked equities came under pressure as Bitcoin fell for a third straight session.
Stitch Fix (SFIX) tumbled more than 17% in premarket, reacting to the company's fourth-quarter print.
Darden Restaurants (DRI), BlackBerry (BB), Costco (COST) and FedEx Frieght (FDXF) are among the companies due to announce their quarterly results Thursday.
Asia Follows Wall Street Lower, Japan Plays Catchup
Asian stocks ended mostly lower, reacting to Wall Street's pullback overnight and the rising Treasury yields and their ramification.
That said, the Japanese market, which opened after a three-session break advanced, the Nikkei 225 Index rising 0.76% to 65,513.99 on Thursday, with technology and artificial intelligence stocks leading gains as they caught up with global peers.
Chinese equities lagged. Hang Seng and Shanghai Comp retreated despite early optimism from President Xi Jinping's state visit to the U.S., while a two-month extension to the US-China trade truce until January 10th also failed to spur risk appetite. ASX 200 retreated with the declines led by weakness in miners, real estate and materials, while sentiment was not helped by mixed jobs data including an unexpected rise in the Unemployment Rate to a five-year high.
European Open
European bourses opened on the defensive, tracking Wall Street's Wednesday weakness and the bond-market squeeze. Regional benchmarks are treading water after Wednesday's close.
While the U.K.'s FTSE 100 edged up, the rest of the major markets in the region moved moderately lower.
Macro Data Preview
The U.S. calendar is compact but rate-sensitive. At 8:30 a.m. ET, Initial Claims lead the docket, followed by New Residential Sales at 10:00 a.m. ET. Initial Jobless Claims are the most timely labor-market indicator — a rising trend is an early warning of a weakening economy. The prior print, for the week ending September 12, came in at 196,000.
Key Technical Levels to Watch
- S&P 500 futures: The cash index finished at 7,706.03 on Wednesday, keeping the 7,700 level as immediate pivot; a decisive break below could open the door to the 7,600 area.
- 10-Year Treasury Yield: The 5.12% area now acts as the reference level; a sustained move above would keep equity multiples under pressure.
- WTI: Oil prices are back up above $93 per barrel; a sustained WTI break above $90 would reinforce the inflation trade driving yields higher.
