U.S. stock futures were largely unchanged Friday morning as surging Treasury yields continued to weigh on markets, with the Dow preparing for its fourth consecutive weekly loss. Global markets showed mixed performance, while oil prices dipped amid diplomatic hopes for the Iran conflict.
Key economic data and geopolitical developments, including German consumer confidence and U.S.-China discussions on AI, further influenced investor sentiment.
U.S. equity futures showed minimal movement early Friday, influenced by the continued ascent in Treasury yields and a mix of international market performance. The Dow Jones Industrial Average is poised for its fourth consecutive weekly decline, while the S&P 500 and Nasdaq Composite concluded Thursday's regular trading flat.
S&P 500 futures dipped 0.05%, while Nasdaq-100 futures slightly gained. Futures connected to the Dow Jones Industrial Average nudged up 3 points, or 0.01%.
Bond Market Drama and Fed Outlook
The bond market continued its dramatic climb, with the 10-year Treasury yield reaching 5.225% late Thursday—its highest level since 2007. The 30-year yield also surged to 5.502%. This week's yield rally was fueled by hawkish remarks from Federal Reserve Governor Michael Barr, persistent high energy prices due to the Iran conflict, and a strong purchasing managers' report. The CME FedWatch tool indicates a roughly 68% probability of an October rate hike.
Consumer borrowing costs are also rising, with the 30-year fixed rate mortgage hitting 7.45%, a level not seen since April 2024.
Economist Heather Berger from Morgan Stanley noted that these rising pressures are expected to curb spending, particularly on goods, contributing to a projected 40 basis point deceleration in real consumption growth next year.
Looking ahead, traders will be closely watching the University of Michigan consumer sentiment report and durable goods data.
Global Market Snapshot
Asia-Pacific Mixed Performance
In Asia-Pacific markets, Japan's Nikkei 225 closed 1.3% higher, while Australia's S&P/ASX 200 fell 0.43%. Hong Kong's Hang Seng index experienced a 1.21% drop during Friday's final trading hour. Markets in mainland China and South Korea were closed for holidays.
European Stocks Edge Higher, Oil Sector Declines
European stocks generally opened higher on Friday, boosted by a pullback in oil prices. The pan-European Stoxx 600 climbed almost 0.7% shortly after the opening bell, with most sectors in positive territory and on track for a 0.15% weekly gain.
However, shares of major European oil companies, including BP, Shell, and TotalEnergies, edged lower as crude oil prices continued their retreat.
German Consumer Confidence Sees 'Significant Setback'
A new report revealed a "significant setback" in German consumer confidence for September. The Nuremberg Institute for Market Decisions (NIM) stated that rising energy prices severely impacted income expectations, which are now at their lowest since April. Rolf Bürkl, head of consumer climate at NIM, explained that households anticipate high energy prices will reduce their purchasing power, leading to increased skepticism about their future income.
Geopolitical Developments
China's Xi Urges AI Cooperation with U.S.
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Chinese President Xi Jinping conveyed to U.S. President Donald Trump that ample opportunities for cooperation exist in artificial intelligence, outweighing competitive aspects. A state media readout of their White House meeting on Thursday indicated Xi's call for continued AI dialogue to exchange views on risks and benefits, and jointly prevent the misuse or malicious application of AI.
Oil Falls Amid Iran Conflict Diplomacy Hopes
Oil prices retreated on Friday following reports of U.S. and Iranian negotiators discussing a phased deal to resolve the standoff in the Persian Gulf. Brent crude futures for November delivery fell 1% to $93.66 a barrel, while U.S. West Texas Intermediate futures for November dropped 0.68% to $105.86 per barrel. Despite a recent pullback, gasoline prices continue to rise, with the national average for a gallon of gasoline at $4.48 on Thursday, up from $3.16 a year ago, primarily due to the ongoing U.S. war with Iran.
Notable Stock Movements in Extended Trading
- Akamai Technologies: Surged almost 20% after announcing an $11.6 billion, seven-year computing power agreement with Anthropic. The deal includes a warrant allowing Anthropic to purchase up to 5% of Akamai's shares.
- Costco Wholesale: Marginally higher after reporting fourth-quarter results that exceeded estimates, with adjusted earnings of $6.60 per share and revenue of $95.72 billion.
- Scholastic Corp: Tanked almost 13% after the children's book publisher posted a fiscal first-quarter adjusted loss of $3.63 per share and a 4% decline in revenue to $216.8 million.
- Oracle Corp Japan: Its shares jumped over 7% in Tokyo following record fiscal first-quarter sales and profits, driven by strong cloud business growth. This contrasts with a 3% drop in U.S.-listed Oracle shares due to a "force majeure" notice for its New Mexico data center project.
