US equity futures edged higher on Friday as investors prepared for preliminary August business activity data while continuing to monitor volatility in bond markets, developments in the retail sector and Washington’s plans for tougher sanctions against Iran.
Ross Stores (NASDAQ:ROST) was among the notable corporate movers after the discount retailer raised its annual profit guidance following stronger-than-expected quarterly earnings.
Stock futures point to modest gains
By 03:11 ET (07:11 GMT), Dow futures were up 65 points, or 0.1%, while contracts linked to the S&P 500 rose 14 points, or 0.2%. Nasdaq 100 futures gained 115 points, equivalent to 0.4%.
The advance followed a weaker session on Wall Street on Thursday, when renewed increases in government bond yields weighed on equities.
Earlier in the week, the US Treasury Department announced plans to increase buybacks of longer-dated debt, briefly easing concerns after the 30-year Treasury yield climbed close to a two-decade high.
That relief did not last, however, as bond yields resumed their rise.
Vital Knowledge analysts said comments from US Treasury Secretary Scott Bessent during a CNBC interview failed to restore confidence and could even have been “counterproductive by conveying both panic and powerlessness” in confronting the forces pushing borrowing costs higher.
These pressures include higher energy prices linked to the Iran conflict, widening fiscal deficits and rapidly expanding investment in artificial intelligence infrastructure.
Investors look to August PMI readings
Friday’s preliminary PMI figures will provide another indication of the health of the US economy as businesses contend with higher oil prices and uncertainty over the future path of interest rates.
Economic activity has so far remained comparatively resilient despite the energy shock and growing speculation that central banks could be forced to tighten policy further if inflation remains elevated.
Deutsche Bank analysts noted that the US composite PMI, combining manufacturing and services activity, reached its strongest level of 2026 in July.
For August, the S&P Global services PMI is expected to ease to 53.9, while the manufacturing index is forecast to increase to 54.0. Any figure above 50 signals expansion.
Ross Stores rallies after lifting guidance
Ross Stores (NASDAQ:ROST) shares jumped more than 8% in extended trading after the retailer raised its full-year earnings outlook and delivered second-quarter profit above expectations.
The company has been strengthening its value-focused merchandise offering as inflation-conscious consumers increasingly seek lower-priced alternatives to traditional department stores and specialist apparel retailers.
CEO Jim Conroy said customer spending improved across product categories and geographic markets, with particularly strong demand for home products and cosmetics.
Ross now expects earnings per share of $8.61 to $8.77 for the year, compared with its previous forecast of $7.50 to $7.74.
Adjusted quarterly earnings reached $2.06 per share, ahead of the $1.94 expected by analysts, according to LSEG estimates cited by Reuters.
Retail results keep consumer outlook in focus
Elsewhere in the sector, disappointing results from Walmart contributed to concerns about the resilience of US household spending.
Vital Knowledge analysts said weaker retail earnings across the week have increased uncertainty over the American consumer, particularly as households continue to face elevated prices and borrowing costs.
Investors are therefore closely watching retail performance for evidence that cost-of-living pressures are beginning to translate into softer discretionary demand.
Washington prepares “toughest sanctions in history” against Iran
Geopolitical tensions remained firmly in focus after Bessent said the United States was preparing a major new sanctions package against Iran.
“It is a one-two punch. We have the blockade, and we are going to have the toughest sanctions in history,” Bessent said in an interview with CNBC, adding that he will hold a press conference on Monday to outline the details of the plan.
Bessent also called on China to support the sanctions effort, although Beijing has largely opposed further restrictions on Tehran.
His comments followed President Donald Trump’s warning that Iran faced “economic warfare and isolation on an unprecedented scale.”
Iran rejected Washington’s rhetoric, with Foreign Minister Abbas Araghchi accusing Trump of attempting to draw attention away from domestic US issues, particularly rising government debt.
Oil prices dip from one-month highs
Crude prices moved lower on Friday but remained on course for another strong weekly advance as tensions surrounding the Strait of Hormuz persisted.
Brent futures fell 0.4% to $93.41 a barrel, while West Texas Intermediate crude declined 0.6% to $86.36.
Brent remained set for a weekly increase of more than 5%, reflecting continued concern that disruption around the Strait of Hormuz could restrict global energy supplies.
The combination of elevated oil prices, volatile bond yields and potentially tighter monetary policy leaves investors facing a complex backdrop as they await the latest PMI readings.
