Key facts
- US stock futures declined Thursday amid ongoing Middle East conflict and ahead of a summit between Presidents Donald Trump and Xi Jinping.
- Brent crude oil prices rose above $100 a barrel after US and Iran leaders exchanged barbs.
- The 30-year Treasury yield reached its highest level since 2004.
- Investors now see a 71% chance of a Federal Reserve rate hike next month.
- New York Fed President John Williams indicated that rates might need to be raised again this year.
- US Treasury Secretary Scott Bessent announced an extension of the US-China truce until January 10.
Wall Street futures dropped on Thursday as persistent Middle East conflict and caution ahead of a summit between Presidents Donald Trump and Xi Jinping weighed on sentiment. Brent crude oil prices climbed back above $100 a barrel after US and Iran leaders exchanged barbs at the UN General Assembly this week. The yield on the 30-year Treasury bond reached its highest since 2004, as investors priced in the likelihood of a prolonged conflict.
AI-related stocks, which had recently powered the Nasdaq to record highs, were also among top decliners, with Meta and Nvidia falling 2% and 1% respectively, while Marvell and Intel slid about 3% each. The upcoming summit is expected to focus on discussions around AI regulation, the Middle East conflict, and Taiwan. Top executives from General Motors, Meta, Apple, Amazon, and Tesla are also anticipated to meet with Trump and Xi. Meanwhile, US Treasury Secretary Scott Bessent stated on Wednesday that the two economic superpowers have agreed to extend their truce until January 10.
At 5:25 a.m. ET, Dow E-minis were down 173 points, or 0.33%, S&P 500 E-minis were down 44.25 points, or 0.57%, and Nasdaq 100 E-minis were down 309.75 points, or 1.01%.
Higher energy costs and recent data suggesting strong business activity have led investors to bet on further interest rate increases by the Federal Reserve. The CME Group's FedWatch Tool showed a 71% chance of at least a 25-basis-point hike next month, up from around 50% a day ago. New York Fed President John Williams reinforced these expectations, stating it was reasonable to think that rates might need to be raised again this year.