U.S. Stock Futures Slip as Oil Prices and Bond Yields Surge

December S&P 500 E-Mini futures (ESZ26) are down -0.41%, and December Nasdaq 100 E-Mini futures (NQZ26) are down -0.57% this morning as a fresh jump in oil prices pushed bond yields higher, sapping investors’ risk appetite.

The price of WTI crude jumped over +4% on Thursday after The Atlantic reported that the White House asked the Pentagon to prepare options for strikes against Iran that could be carried out before next month’s midterm elections. Houthi militants’ escalating attacks on Saudi Arabia, another tanker strike in the Persian Gulf, and rising U.S. offshore production shutdowns ahead of Hurricane Isaias added to unease in the oil market.

Treasuries fell across the curve as higher oil prices deepened investor concerns about inflation. The 10-year T-note yield rose five basis points to 5.35%.

Investors are now awaiting U.S. jobless claims data and comments from a Federal Reserve official.

In yesterday’s trading session, Wall Street’s three main equity benchmarks closed lower, pressured by elevated oil prices and Treasury yields. Chip stocks declined, with ON Semiconductor (ON) falling over -4% and Microchip Technology (MCHP) dropping about -4%. Also, cryptocurrency-exposed stocks sank as Bitcoin dropped more than -2%, with Strategy (MSTR) slumping over -6% to lead losers in the Nasdaq 100 and MARA Holdings (MARA) falling more than -5%. In addition, Caterpillar (CAT) slid over -5% to lead losers in the Dow and Deere (DE) fell more than -3% after the FTC and USDA launched a public inquiry into the farm equipment and distribution industry. On the bullish side, Micron Technology (MU) rose over +4% and was the top percentage gainer in the Nasdaq 100 after D.A. Davidson raised its price target on the stock to $3,000 from $2,100.

Economic data released on Wednesday showed that U.S. consumer credit rose by $8.3 billion in August, weaker than expectations of $14.5 billion.

Meanwhile, the minutes of the Federal Open Market Committee’s September 15-16 meeting, released on Wednesday, showed that all 19 officials supported the decision to raise interest rates, with many viewing the move as necessary to guard against the risk of intensifying price pressures. Still, the minutes offered little indication that officials were in a hurry to deliver another rate hike this month. “Most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end,” according to the FOMC minutes. Officials also said they would approach each meeting with “an open mind” and base future decisions on incoming data.

U.S. rate futures are currently pricing in an 80.6% chance of no rate change and a 19.4% chance of a 25-basis-point rate hike at October’s monetary policy meeting.

Today, investors will focus on U.S. initial jobless claims data, set to be released in a couple of hours. Economists expect applications for U.S. unemployment benefits to come in at 200K in the week ended Oct. 3, compared with 197K in the prior week.

U.S. wholesale inventories data will also be released today. Economists anticipate that the final August figure will remain unrevised at +0.7% m/m.

In addition, market participants will parse comments from St. Louis Fed President Alberto Musalem today.

On the earnings front, soft drinks and snacks maker PepsiCo (PEP) is set to report its Q3 results today.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 5.35%, up +0.94%.

The Euro Stoxx 50 Index is down -1.15% this morning as surging oil prices and bond yields dampened sentiment. Bank stocks led the declines on Thursday as turmoil in French debt markets poses growing risks to the sector. Mining and industrial stocks also slumped. Data from the federal statistics office released on Thursday showed that German exports unexpectedly fell in August amid a sharp drop in shipments to the U.S., dampening hopes that trade will support growth this year. At the same time, the country’s imports rose, narrowing its trade surplus to 19.5 billion euros. Meanwhile, Eurozone government bond yields climbed on Thursday as higher oil prices fueled inflation concerns. European Central Bank Governing Council member Olaf Sleijpen said on Thursday that households’ near-term inflation expectations in the Eurozone have risen, although longer-term expectations remain firmly anchored around the ECB’s 2% target. In corporate news, Argenx (ARGX.BB) cratered over -17% after the biotech firm discontinued a trial for Sjögren’s disease following an analysis indicating it was unlikely to meet its primary endpoint.

Germany’s Exports and Imports data were released today.

The German August Exports unexpectedly fell -0.8% m/m, weaker than expectations of +0.8% m/m.

The German August Imports rose +0.9% m/m, weaker than expectations of +2.8% m/m.

Asian stock markets today settled in the red. China’s Shanghai Composite Index ($CHSC) closed down -0.79%, and Japan’s Nikkei 225 Stock Index ($NKY) closed down -1.42%.

China’s Shanghai Composite Index gave up earlier gains and closed lower today as trading resumed following a week-long holiday. Technology stocks led the declines on Thursday, tracking inflation-induced losses among their regional peers. Adding to pressure on tech stocks was a slump in optical-communications shares amid concerns over potential U.S. restrictions. Sentiment was also dampened by weak holiday spending data, which pointed to subdued travel activity, lower per-capita spending, and lackluster urban entertainment demand, including a sharp drop in box-office sales. However, gains in energy and banking stocks helped limit the benchmark index’s losses. Elsewhere, Chinese Finance Minister Lan Foan said in an article published on Oct. 1 that authorities are considering additional fiscal measures to meet China’s 2026 growth target. Investors now turn their attention to a series of key Chinese economic data releases due next week and the Communist Party’s fifth plenum, scheduled for Oct. 26-29. In corporate news, CIG Shanghai tumbled over -6% after announcing plans to raise about $840 million through a convertible-bond offering and share placement.

Japan’s Nikkei 225 Stock Index closed lower today as overnight losses on Wall Street prompted investors to continue taking profits after a recent rally. An announcement of changes to the Topix Index weightings also triggered selling in stocks set to have their index weightings reduced. In addition, rising oil prices fueled inflation concerns and added to selling pressure. Machinery and financial stocks led the declines on Thursday. Electronics stocks also slumped. Meanwhile, Bank of Japan branch managers said on Thursday that rising raw material costs were increasingly being passed on to consumer goods, with some firms raising prices more often than in the past, a sign of broadening inflationary pressures across the country. In its quarterly regional economic report, released earlier on Thursday, the BOJ upgraded its assessment of two of Japan’s nine regions and left its view of the remaining seven unchanged, saying all were recovering moderately. On the economic front, data showed that Japan’s current account surplus widened in August as higher dividend income from overseas subsidiaries boosted the primary income surplus. Elsewhere, foreign investors bought a net 2.19 trillion yen worth of Japanese stocks in the week ended Oct. 3, snapping a three-week streak of net sales, according to Ministry of Finance data. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -9.59% at 29.59.

The Japanese August Current Account n.s.a. stood at 4.062 trillion yen, stronger than expectations of 3.194 trillion yen.

The Japanese September Economy Watchers Current Index came in at 47.0, stronger than expectations of 46.7.

Pre-Market U.S. Stock Movers

Chip and AI infrastructure stocks slid in pre-market trading. Arm Holdings (ARM) was down over -2%, while Marvell Technology (MRVL) and Intel (INTC) each fell more than -1%.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - October 8th

PepsiCo (PEP), Oil-Dri Corporation of America (ODC), Park Aerospace (PKE), AngioDynamics (ANGO), Helen of Troy (HELE).

On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.