Stock futures inched higher on Wednesday as traders digest the latest rise in U.S. Treasury yields, which continue to pressure equity markets. Key indices like the Dow Jones Industrial Average, S&P 500, and Nasdaq-100 futures saw modest gains in early trading.
In Asia, Japan’s Nikkei 225 outperformed, while other markets showed mixed results. Investors are closely monitoring the upcoming PCE price index for inflation clues and awaiting further guidance from the Federal Reserve regarding interest rates.
Traders on the floor of the New York Stock Exchange (NYSE). (Brendan McDermid | Reuters)
U.S. stock futures showed a slight uptick early Wednesday, a modest recovery after equities were pressured by a persistent rise in Treasury yields in the previous session. This follows a pattern where rising bond yields continue to cast a shadow over the stock market.
Contracts tied to the Dow Jones Industrial Average were up 0.36%, while S&P 500 futures gained 0.23%. The tech-heavy Nasdaq-100 futures saw a smaller increase of 0.10%.
Overnight in Asia, major indices experienced a mixed performance. Japan's Nikkei 225 led the gains, climbing 1.81%, with the broader Topix also rising 1.58%. South Korea's Kospi dipped slightly by 0.38%, though the smaller Kosdaq added 0.84%. In China, the CSI 300 edged up 0.15%, while Hong Kong's Hang Seng index remained flat.
The significant factor influencing market sentiment remains the trajectory of bond yields. The 30-year Treasury yield crossed the 5.6% mark, levels not seen since June 2002. Concurrently, the 10-year yield reached a fresh high for 2007, nearing 5.3%. These increases contributed to a decline in the Dow by over 100 points on Tuesday, with the S&P 500 and Nasdaq experiencing minor drops.
Despite these headwinds, oil prices saw a decline on Tuesday, offering some relief.
Jose Torres, senior economist at Interactive Brokers, observed that equities are "trying to hang in there, but tighter financial conditions are emboldening the bears and lifting interest in downside hedges."
Market participants are also closely watching for any further signals from Federal Reserve officials. New comments from New York Fed President John Williams suggested a cautious approach, stating, "there is no need for urgency, and we have time to gather more information" before the Fed's upcoming October meeting. This has somewhat eased immediate fears of an imminent rate hike.
Current projections from the CME Group's FedWatch tool indicate a 49% probability of a quarter-point rate increase next month, a notable decrease from 71% just a day prior.
Looking ahead to Wednesday, traders will focus on the August Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation indicator. Economists anticipate the PCE to rise 0.3% for the month, resulting in an annual pace of 3.7%.
Wednesday also marks the final day of September and the third quarter. Market performance has been varied, with the S&P 500 and Dow tracking for monthly declines while the Nasdaq shows a gain of over 1%. For the quarter, the S&P 500 and Nasdaq are up approximately 2%, while the Dow is down nearly 2%.
China's manufacturing activity showed signs of recovery in September, with the official manufacturing PMI rising to 50.1, snapping a two-month contractionary streak. This expansion was attributed to increased activity in high-tech manufacturing and consumer industries, according to the National Bureau of Statistics. The non-manufacturing PMI also returned to expansionary territory, indicating a pickup in the services sector.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., Sept. 25, 2026. (Brendan McDermid | Reuters)
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