S&P 500 futures rose Friday as falling oil prices eased pressure from a global bond selloff that had rattled Wall Street. Treasury yields jumped to multi-decade highs this week on bets the Federal Reserve will keep raising rates, while a report of possible U.S.-Iran talks over the Strait of Hormuz pulled oil back from its recent surge.
U.S. stock index futures inched higher on Friday as a drop in oil prices helped soothe investor jitters after a surge in Treasury yields spooked Wall Street this week. By 05:24 ET, S&P 500 futures had jumped by 23 points, or 0.3%, while Dow futures rose 137 points, or 0.3%, and Nasdaq 100 futures climbed 178 points, or 0.6%.
Wall Street Closes Mixed Thursday
The main averages notched a mixed close on Thursday, as the Dow Jones Industrial Average and the S&P 500 both dipped, while the Nasdaq Composite eked out a marginal 0.01% gain.
A selloff in global debt has weighed on equity-market sentiment since Wednesday. Driven by elevated oil prices and signs of U.S. economic resilience, bets have increased that the Federal Reserve will have more room to raise interest rates later this year. Last week, the Fed lifted rates by a quarter of a percentage point, citing a need to quell energy-fueled inflation.
These wagers on the Fed's rate path pushed the benchmark 10-year U.S. Treasury yield to a post-2007 peak of 5.2% by Thursday's close, while the 30-year yield climbed to its highest level since 2004. The 10-year yield logged its biggest two-day climb since President Donald Trump's "Liberation Day" tariffs last year.
Oil Retreats on Iran Talks Report
Oil prices fell Friday as reports that the U.S. and Iran were exploring a phased deal to reopen the Strait of Hormuz tempered some supply concerns, though a Houthi missile attack on Saudi Arabia kept geopolitical risks elevated. Both oil benchmarks had climbed as much as 5% in the previous session before paring gains on the U.S.-Iran talk reports.
Thursday's gains followed Saudi Arabia's statement that it intercepted six ballistic missiles fired by Yemen's Houthis toward areas including Taif and Yanbu. The attacks revived concerns about Saudi oil infrastructure and export routes, after earlier damage to the kingdom's east-west pipeline had already disrupted crude shipments to the Yanbu hub. Saudi Arabia has increased crude pumping toward Yanbu, but tanker loadings from the port have yet to fully resume.
According to Vital Knowledge: "the fact Brent remains north of $100 shows markets are pretty skeptical". The analysts flagged a Wall Street Journal report that efforts to revive the Iran talks face resistance from Gulf oil producers.
A pattern has recently emerged in which rising oil prices push bond yields higher and stocks lower, though some observers have questioned the economic logic of oil dictating long-term interest rates.
Source: Investing.com
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