Key facts
- US stock futures attempted a recovery ahead of inflation data, following a three-day slide.
- Oil prices remained above $100 a barrel due to Middle East conflict, impacting equity outlook.
- The benchmark 10-year U.S. Treasury yield reached its highest level since 2023.
- Traders are pricing in a 62.2% chance of a Federal Reserve rate hike this month.
- Brent crude futures settled near $102 a barrel.
- Apple shares were up 1.19% after launching a new iPhone model.
US stock futures attempted a recovery on Thursday morning, signaling a potential rebound after a three-day slide, as investors cautiously re-entered the market ahead of crucial inflation data. The ongoing conflict in the Middle East has pushed oil prices above $100 a barrel, a development that has previously clouded the equity outlook and reinforced expectations that the Federal Reserve might raise interest rates this month. Investors are closely monitoring the U.S. Producer Price Index report, due later in the session, for insights into the Fed's monetary policy decisions. While the PPI typically receives less attention than the Consumer Price Index, any indication of accelerating input costs could heighten concerns about broadening inflation pressures.
At 5:09 a.m. ET, Dow E-minis showed a gain of 108 points (0.21%), S&P 500 E-minis were up 9.75 points (0.13%), while Nasdaq 100 E-minis were down 26.25 points (0.09%). Jeff Buchbinder, chief equity strategist for LPL Financial, noted that strong economic fundamentals can help offset headwinds from higher rates, suggesting that equity markets can move higher even in a rising-rate environment as long as economic growth remains intact.
Equities have also faced pressure from elevated yields on U.S. Treasuries. The Treasury Department announced on Wednesday its intention to purchase up to $6 billion in longer-dated Treasury bonds in an effort to manage yields. However, the benchmark 10-year U.S. Treasury yield was trading at 4.8508%, its highest level since 2023. Strategists at ING commented that it may be difficult for Treasury Secretary Scott Bessent to exert significant control over long-end rates. Kyle Rodda, senior financial market analyst at Capital.com, suggested that a sustained drop in long-end yields would require fundamental shifts in macroeconomic policy, such as reduced government spending or further Fed rate hikes.
Traders are currently pricing in a 62.2% probability of a rate hike at the upcoming Federal Reserve meeting, according to the CME FedWatch tool. Brent crude futures rose 0.81% to settle near $102 a barrel, having crossed the $100 mark for the first time in over six weeks on Wednesday. In corporate news, American Eagle Outfitters shares fell 11.37% premarket after reiterating its annual comparable sales forecast and projecting unchanged gross margins for the current quarter. Apple saw a rise of 1.19% following the launch of its new folding iPhone, while Meta gained 0.74% after a significant positive performance the previous day.