Futures tracking the Dow Jones Industrial Average and the S&P 500 attempted a modest recovery on Thursday, offering a brief respite after a three‑day slide. At 5:09 a.m. ET, Dow E‑minis were up 108 points (0.21%) and S&P 500 E‑mins rose 9.75 points (0.13%). The Nasdaq 100 E‑mins, however, slipped 26.25 points (0.09%).
Inflation data drives market focus
Investors are waiting for the U.S. Producer Price Index (PPI) report, due later in the session, to gauge whether the Federal Reserve will need to raise rates again this month. While the Consumer Price Index (CPI) will be released on Friday, the PPI often provides an early look at wholesale price pressures that can filter through to consumer prices.
“While additional hikes could create periods of volatility, history suggests that strong economic fundamentals can help offset the headwinds from higher rates,” said Jeff Buchbinder, chief equity strategist for LPL Financial. “As long as economic growth remains intact and recession risks stay contained, equity markets have historically been able to move higher even in a rising‑rate environment.”
Higher Treasury yields add pressure
Equities also face headwinds from elevated yields on risk‑free U.S. Treasuries. The Treasury Department announced Wednesday that it would purchase up to $6 billion of longer‑dated Treasury bonds in an effort to keep yields from climbing too sharply. Despite that, the benchmark 10‑year Treasury yield sat at 4.8508%, its highest level since 2023.
ING strategists noted, “It’s early days. But markets may be telegraphing to Treasury Secretary Scott Bessent that it will be tough for him to have meaningful control over long‑end rates.” Higher yields make bonds more attractive relative to stocks, pulling some capital away from equities.
Kyle Rodda, senior financial market analyst at Capital.com, added, “While an even more muscular attempt to lower yields may have had a better chance of working, their rise illustrates the marginal and short‑term impact of buybacks. Ultimately, a sustained drop in long‑end yields can only be achieved by genuine shifts in macroeconomic policy: either the U.S. government pulling back on spending or the Fed lifting rates.”
Oil prices and market sentiment
Geopolitical tension in the Middle East has pushed Brent crude futures above $100 a barrel for the first time since July, with the contract settling near $102 after crossing the $100 mark earlier in the week. Higher energy costs add to inflation concerns and reinforce expectations that the Fed may need to act.
Traders using the CME FedWatch tool see a 62.2% probability of a rate hike this month, reflecting market expectations that the central bank will continue to tighten policy if inflation remains stubborn.
Company news amid market moves
American Eagle Outfitters shares fell 11.37% in pre‑market trading after the retailer reaffirmed its annual comparable‑sales forecast and indicated that gross margins for the current quarter could remain flat year‑over‑year.
Apple posted a 1.19% gain after unveiling “Duo,” a folding iPhone priced at $1,999, signaling the company’s continued push into premium hardware.
Meta Platforms rose 0.74% following its strongest trading day in more than two months, buoyed by steady advertising revenue.
Outlook
With the PPI on the horizon and Treasury yields still elevated, market participants will watch closely for any signals that the Trump administration’s fiscal policies are influencing inflation dynamics. A clear reading from the PPI could either reinforce the case for another rate hike or provide relief if input‑cost pressures appear to be easing.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
