S&P 500 futures fell about 0.8% early Thursday as a four-week high in Treasury yields, rising oil prices, and inflation worries weighed on stocks. The pullback followed Wednesday's 0.28% decline, though prediction-market traders were betting the index would open higher.
S&P 500 futures fell approximately 0.8% early Thursday, while Nasdaq 100 futures dropped roughly 1.2%, as rising global borrowing costs and higher oil prices unsettled sentiment. The move extended a cautious tone after the benchmark closed down 0.28% at 7,482.71 on Wednesday.
Yields and oil squeeze sentiment
The US 10-year Treasury yield climbed to 4.58%, a four-week high that keeps mortgages, auto loans, and corporate borrowing expensive. Fresh crude inventory reductions and supply concerns are elevating bond yields across the UK, Germany, and France.
Because of this, rate-sensitive sectors such as banking, real estate, and smaller companies are under pressure from the mix of higher yields and stubborn inflation. Near-term inflation expectations stand at 3.7%, reinforcing worries that price pressures will not ease quickly.
Middle East risk revives inflation fears
The selling followed renewed hostilities between the US and Iran that pushed crude sharply higher. The US launched fresh strikes on Iran after attacks on commercial vessels near the Strait of Hormuz, and President Donald Trump said he was no longer interested in negotiating with Tehran. Brent crude surged more than 5% on Wednesday, raising concerns that costlier energy could keep inflation elevated.
According to Swissquote Senior Analyst Ipek Ozkardeskaya: Middle East events had "reversed the short-term bearish outlook for oil prices."
Traders bet on a rebound
Yet not everyone was positioned for more losses. The July 9 Polymarket contract implied an 85% probability the index would open higher on Thursday. Minutes from the Federal Reserve's June meeting showed policymakers remain divided on the path for interest rates, keeping the prospect of higher-for-longer rates in play. Thursday's weekly jobless claims report and PepsiCo's Q2 earnings headline the day's data.
Sources: Simply Wall St, Benzinga, Yahoo Finance
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