U.S. equity futures traded lower on Thursday as the benchmark 10-year Treasury yield reached its highest level since July 2007 and oil prices extended their rebound.
The 30-year Treasury yield also moved higher, reaching its highest level since 2004, following a broader increase in government bond yields during the previous session.
U.S. crude oil futures rose nearly 2% after gaining 1.8% on Wednesday, when crude ended a five-session losing streak.
The moves came as investors assessed developments in the Middle East, expectations for Federal Reserve monetary policy and an upcoming meeting between U.S. President Donald Trump and Chinese President Xi Jinping.
Oil Rebounds as Markets Assess U.S.-Iran Talks
Oil markets remained focused on the prospects for diplomatic progress between the United States and Iran.
Expectations that talks could contribute to an easing of tensions had been among the factors accompanying lower crude prices earlier in the week. Prices subsequently rebounded as uncertainty over the negotiations continued.
The latest moves followed remarks by Trump and Iranian President Masoud Pezeshkian at the United Nations General Assembly.
Trump threatened to “annihilate” Iran if an agreement was not reached, while also discussing the possibility of further negotiations.
Pezeshkian criticised what he called “signs of a bullying mentality” from the United States and said Iran would not surrender.
The comments represented the positions of the respective leaders as negotiations continued and did not establish the outcome of future diplomatic discussions.
Trump-Xi Meeting Adds Another Focus for Markets
Separately, Trump and Xi are scheduled to meet at the White House on Thursday, with trade, artificial intelligence and critical minerals expected to be among the subjects discussed.
The meeting comes as Washington and Beijing continue negotiations over their economic relationship.
U.S. Treasury Secretary Scott Bessent has announced an extension of the existing trade truce between the two countries, providing additional time for negotiations.
The extension delays the expiry of the current arrangements but does not determine whether a broader agreement will be reached.
Nasdaq Drops 1.1% in Wednesday Session
Thursday’s lower futures followed declines across all three major U.S. indexes on Wednesday.
The Nasdaq Composite recorded the largest percentage decline, falling 308.24 points, or 1.1%, to 26,936.04.
The S&P 500 declined 58.61 points, or 0.8%, to 7,706.03, while the Dow Jones Industrial Average dropped 352.10 points, or 0.7%, to 51,511.59.
The indexes closed near their session lows as investors assessed rising oil prices, higher bond yields and the outlook for monetary policy.
Gold also declined on Wednesday as the U.S. dollar remained firm and markets reassessed expectations for further Federal Reserve interest-rate changes.
September PMIs Come in Above Forecasts
U.S. economic data added to the information being considered by investors.
Preliminary September S&P Global purchasing managers’ indexes for manufacturing, services and composite activity all exceeded expectations, according to the information provided.
The readings contributed to market discussion over the Federal Reserve’s next policy steps. They do not, however, determine future interest-rate decisions, which will depend on policymakers’ assessment of incoming economic data.
Energy-market data also drew attention after the U.S. Energy Information Administration reported an increase of almost 3 million barrels in crude inventories during the latest week. Markets had expected inventories to decline.
U.S. stock futures remained lower ahead of Thursday’s opening as investors monitored developments in bond, energy and currency markets alongside the U.S.-Iran and U.S.-China discussions.
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