U.S. stock futures fall as 10-year yield hits highest since 2023

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U.S. stock futures fall

Highlights

U.S. stock futures fell as bond yields climbed.
The 10-year Treasury yield reached 4.814%.
Oil above $90 revived concerns about inflation.

Dow Jones futures fell 0.16% to 52,746, while S&P 500 futures dropped 0.26% to 7,623. Nasdaq 100 futures declined 0.55% to 28,965 as rising bond yields and oil prices weighed on investor sentiment, CNBC reported.

Treasury yields put pressure on stocks

The U.S. 10-year Treasury yield reached 4.814% during the session, its highest level since November 2023. The move extended a broader global bond selloff, with government borrowing costs also rising in Britain, Germany, and France. Japanese 10-year yields remained near multidecade highs.

Higher yields can reduce the relative appeal of equities by raising the return available on government debt and increasing the discount rate applied to future corporate earnings. That dynamic tends to weigh particularly heavily on technology and other growth stocks, helping explain the larger decline in Nasdaq 100 futures.

Oil is adding another source of pressure. West Texas Intermediate crude traded above $90 a barrel after renewed U.S. military strikes on Iran raised concerns about another escalation in the Middle East.

Global equities retreat

Selling extended beyond U.S. markets. The pan-European Stoxx 600 fell about 0.5%, while Germany's DAX dropped 0.7%. British and French benchmarks were also lower.

Asian equities posted steeper losses. Japan's Nikkei 225 closed down 2.74%, South Korea's Kospi fell 4%, Australia's S&P/ASX 200 lost 0.97%, and China's CSI 300 declined 1.38%.

Investors are now awaiting August private-payroll figures from ADP, factory data, and the Federal Reserve's Beige Book. Hewlett Packard Enterprise, Snowflake, and Broadcom are also due to report earnings after Wednesday's closing bell.

Higher rates complicate the market outlook

The combination of rising oil prices and higher bond yields creates a difficult backdrop for stocks. More expensive energy can feed through to transportation, production, and consumer costs, making inflation harder to contain and potentially limiting the Federal Reserve's room to ease monetary policy.

The 4.814% Treasury yield is therefore more than a bond-market milestone. With WTI above $90 and Nasdaq 100 futures down 0.55%, investors are confronting the possibility that inflation risks and elevated borrowing costs could remain a constraint on equity valuations.

We also reported the global bond market faces a renewed surge in yields.

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