Stock futures slipped Sunday night after a winning week on Wall Street, even as Treasury yields raced to multiyear highs. Rising oil prices added pressure after President Trump rejected Iran's conditional ceasefire proposal, while traders now brace for a week of key inflation and jobs data.
Dow Jones Industrial Average futures pulled back 97 points, or 0.2%. S&P 500 futures lost 0.2% along with Nasdaq-100 futures.
A rise in oil prices weighed on equity futures in early trading. Brent crude traded more than 1% higher at $105.86 per barrel, while West Texas Intermediate futures gained around 1% to $93.20 after President Donald Trump rejected conditions for a ceasefire presented by Iran.
A winning week despite the yield spike
The Dow eked out a 0.3% advance last week, snapping a three-week slide. The S&P 500 and Nasdaq Composite had their best weekly performances since early August, advancing 1.2% and 2.1%, respectively.
Tech-linked stocks led the rally. Meta Platforms rallied nearly 13% in that time as traders cheered its Muse artificial intelligence agent, while Microsoft climbed more than 4% and Apple and Nvidia each advanced more than 1%.
Those gains came even as Treasury yields raced to highs not seen in years, with traders raising bets of further Federal Reserve rate hikes because of persistent inflation. The benchmark 10-year Treasury note yield scaled a level not seen since 2007, and the 30-year bond yield reached a 2004 high. The 2-year note yield also jumped around 17 basis points last week.
According to Vanda Research, Viraj Patel, its global market strategist, wrote to clients: "Institutional investors have been surprisingly resilient through this week's macro volatility."
Rates back in focus this week
Rates return to the spotlight with a slew of economic data on deck. The August personal consumption expenditure price index, the Fed's preferred inflation gauge, is due out Wednesday. New manufacturing numbers follow Thursday, and the closely watched September jobs report arrives Friday.
Higher yields carry a separate cost. With borrowing costs rising, the AI infrastructure buildout is set to get more expensive: JPMorgan estimated in June that $4.1 trillion in AI-related debt will be issued through 2030 as data center companies race to meet demand. Borrowers now face a 10-year Treasury yield near 5.17%, up about 1 percentage point since the start of the year.
Source: CNBC
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