U.S. stock futures advanced Thursday as Wall Street geared up for a new trading month, balancing elevated Treasury yields and a softer inflation report against the anticipation of this week’s jobs data. While September proved challenging for U.S. equities, particularly the Dow and S&P 500, the third quarter saw overall gains for the S&P 500 and Nasdaq. Global markets, including Europe and Asia, experienced mixed starts to October, with bond yields and corporate earnings resilience remaining central themes for investors.
U.S. stock futures saw early gains on Thursday, signaling a cautious optimism as Wall Street embarked on a new trading month. Futures tied to the Dow Jones Industrial Average added 170 points (0.33%), S&P 500 futures advanced by approximately 0.56%, and Nasdaq-100 futures surged over 1%.
This pre-market strength contrasted with Wednesday's regular trading session, which saw the S&P 500 drop 0.3% and the Dow lose over 440 points (0.9%). The Nasdaq Composite, however, managed to outperform, gaining 0.2%.
September, traditionally a challenging month for equities, lived up to its reputation. The S&P 500 fell 0.5% and the Dow dropped 4.3%, primarily due to investor concerns over rising oil prices and a significant surge in Treasury yields, fueling fears of further rate hikes. The Nasdaq, notably, bucked the trend, closing the month up 1.9%. The third quarter ended with the S&P 500 and Nasdaq each advancing about 2%, while the Dow registered a 2.7% loss.
Globally, European markets opened October in negative territory, with the pan-European Stoxx 600 down 0.78%. The U.K.'s FTSE 100 slid 1.37%, France's CAC 40 shed 0.83%, and Germany's DAX tumbled 0.75%. Technology stocks were a rare bright spot. In Asia, markets presented a mixed picture, with Japan's Nikkei 225 rising 0.86% while South Korea's Kospi fell 0.8%. Mainland China and Hong Kong markets were closed for a holiday.
Investors are navigating a complex landscape characterized by a softer-than-anticipated inflation picture (August's personal consumption expenditures price index rose 3.4%, below the 3.7% consensus) but still elevated Treasury yields. The 10-year Treasury yield briefly breached 5.3% on Wednesday, reaching near 2007 highs, while the 30-year yield surpassed 5.6%, its highest since 2002. These high yields are raising concerns about the U.S. government's balance sheet, though TD Securities suggests an imminent fiscal crisis is not indicated due to the gradual impact on overall borrowing costs.
The Federal Reserve's next rate decision at the end of October remains a key point of uncertainty. Meanwhile, a fresh round of corporate earnings reports is expected. Tracie McMillion, head of global asset allocation strategy at Wells Fargo Investment Institute, highlighted the resilience of corporate earnings but posed the critical question of whether this strength can be maintained amidst persistent elevated borrowing costs.
Key economic data releases are expected this week, including initial jobless claims on Thursday morning ET, followed by the crucial September jobs report on Friday. Company-specific news included Nike's earnings report due after the bell on Thursday.
In other corporate developments, Alphabet shares rose more than 1% after hours on Wednesday following the unveiling of Gemini 4 Argon, its most advanced artificial intelligence model. Memory maker Micron also reported better-than-expected quarterly results and issued strong guidance, although its shares saw little change in extended trading.
Beyond the U.S., South Korean President Lee Jae Myung pushed back on previous statements by former President Donald Trump regarding a "historic" $200 billion investment into the U.S., emphasizing that participation in projects like the Alaska LNG project remains subject to commercial viability and legal compliance. Oil prices remained largely unchanged amidst a rebound in Mideast oil exports from Saudi Arabia's Yanbu port, which helped ease supply disruption concerns, while U.S.-Iran talks remained stalled.
