Wall Street futures slipped Wednesday as Treasury yields and oil prices climbed, pulling investor sentiment back from Tuesday's record closes. The Nasdaq and S&P 500 had closed at all-time highs, while the Dow still sits about 5% below its August peak, with Fed minutes and a key bond auction due later in the day.
At 6:02 a.m. ET, Dow E-minis were down 178 points, or 0.34%, while S&P 500 E-minis slipped 11.25 points, or 0.14%. Nasdaq 100 E-minis dropped 129.25 points, or 0.41%.
Record closes give way to caution
The pullback followed a strong session: the tech-heavy Nasdaq and the benchmark S&P 500 ended at all-time highs on Tuesday as AI optimism propelled tech stocks higher. The blue-chip Dow remains about 5% below its August 5 record closing high.
But sentiment turned more cautious as investors reassessed the outlook for interest rates and energy costs. Brent crude moved more than 1% higher to $101.73 per barrel, while West Texas Intermediate futures climbed 0.5% to $89.86.
Yields climb ahead of Fed minutes and bond sale
The benchmark 10-year Treasury yield rose 6 basis points to 5.322%, and the 30-year Treasury bond climbed 6 basis points to 5.703%. Separately, Investing.com reported the 30-year yield at its highest since 2002, up at 5.70% ahead of the release of minutes from the Federal Reserve's September policy meeting, when policymakers raised rates to combat inflation. CNBC reported the Fed's September vote marked its first rate increase since 2023.
Traders now see a 78% chance the Fed holds rates steady this month, with a December rate hike still largely priced in, according to the CME Group's FedWatch tool. The Treasury also plans to sell $39 billion of 10-year notes in Wednesday's auction, which will test demand after Tuesday's 3-year sale stopped through slightly without tailing. BMO's Ian Lyngen and other analysts said the bank expects a meaningful concession in yields ahead of the 10-year reopening.
Earnings season looms
The third-quarter earnings season kicks off next week, with several high-profile financial firms expected to report Tuesday. Analysts currently expect S&P 500 earnings growth of 30.6% for the July-to-September period, led by an expected 114.7% jump in energy earnings and a 66.5% surge in tech results, according to LSEG. That compares with a 54% jump in S&P 500 earnings in the second quarter.
The 10-year note auction lands hours before the Fed minutes hit the tape.
Sources: Investing.com, CNBC
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