Wall Street futures tumble as Treasury yields climb

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Wall Street futures tumble

Highlights

Dow futures fell 494 points, or 0.96%.
Treasury yields and oil prices climbed.
Investors await earnings and jobs data.

December Dow Jones futures stood at 50,955, down 494 points, or 0.96%, according to the latest market readings. S&P 500 futures declined 0.55%, to 7,809.25, while Nasdaq-100 futures dropped 0.84%, to 31,138.50. Renewed increases in energy prices and government bond yields were weighing on sentiment ahead of the opening bell, CNBC reports.

Oil and bond yields pressure equities

The benchmark 10-year Treasury yield rose seven basis points to 5.357%, approaching levels last seen in 2002, while the 30-year yield reached approximately 5.73%, near a 24-year high. Rising yields increase financing costs for companies and reduce the relative appeal of equities, particularly technology stocks whose valuations depend heavily on expectations of future earnings.

Energy markets added to the pressure after President Donald Trump signaled reluctance to reach an agreement with Iran, while reports suggested Washington was considering a major new military campaign. Brent crude climbed 4.6% to $104.82 a barrel, and West Texas Intermediate (WTI) gained 4.5% to $92.23. Higher energy costs threaten to prolong inflation, potentially giving the Federal Reserve further reason to tighten monetary policy.

Earnings season offers a possible counterweight

Despite the selloff in futures, corporate earnings expectations remain strong. FactSet estimates that S&P 500 companies will report blended third-quarter earnings growth of approximately 30%, potentially marking a third consecutive quarter above 25%. Such results could support equity valuations, although investors will also be watching whether higher energy and financing costs are beginning to affect profit margins.

PepsiCo is scheduled to report quarterly results before Thursday's opening bell, while weekly U.S. jobless claims will provide another indication of labor market conditions. Overseas markets were already weaker, with Europe's Stoxx 600 down 0.65% and Germany's DAX losing 0.77%. In Asia, Japan's Nikkei 225 closed 0.93% lower, while South Korea's Kospi declined 2.62%.

Higher rates test the earnings outlook

The latest decline highlights a growing tension between resilient corporate profits and deteriorating financial conditions. Even companies reporting strong revenue growth may face valuation pressure if Treasury yields continue rising, while higher oil prices could increase transportation, manufacturing, and consumer costs.For Wall Street, the immediate question is whether earnings can sustain confidence as inflation risks intensify. Thursday's futures losses suggest investors are becoming less willing to overlook the combination of expensive energy, elevated bond yields, and uncertainty over the next Federal Reserve decision.

We have previously highlighted that gold rebounds from nine-week low amid Iran tensions.

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