U.S. stock futures struggle as investors weigh up higher-for-longer rates


U.S. stock futures struggled Friday, in the aftermath of a poor bond auction and fresh signs that interest rates may stay higher for longer that halted winning streaks for major indexes.

How stock-index futures are trading

  • S&P 500 futures

    slipped 1.5 points to 4,360.75

  • Dow Jones Industrial Average futures

    rose 29 points to 33,974

  • Nasdaq-100 futures

    were off 38.75 points at 15,217.75

On Thursday, the Dow industrials
dropped 220.33 points, or 0.7%, to close at 33,891.94, the S&P 500 
fell 35.43 points, or 0.8%, to close at 4,347.35, and the Nasdaq Composite
dropped 128.97 points, or 0.9%, to 13,521.45.

Market drivers

The S&P 500 and Nasdaq Composite ended their longest winning streaks since November 2021 on Thursday, after a poorly-received $24 billion sale of 30-year Treasury bonds.

Bond yields were slightly easier on Friday. The yield on the 30-year Treasury note
fell 2 basis points to 4.739%, from 4.777% on Thursday, when it nearly notched its biggest one-day jump since June 2022.

It was unclear whether the Treasury auction had been affected by a reported ransomware attack against the U.S. unit of the Industrial & Commercial Bank of China that apparently disrupted the U.S. Treasury market.

Investors were also rethinking the recent rally fueled by hopes that the Federal Reserve’s interest-rate hiking cycle was finishing. Driving angst were comments from Federal Reserve Chairman Jerome Powell, who told an International Monetary Fund panel on Thursday that the central bank was wary of “head fakes” from inflation, and the “2% goal was not assured.”

“This sudden hawkish tone contrasts with the dovish hints provided during the last FOMC meeting, leaving investors with a blurry feeling about the outlook on monetary policies,” said Pierre Veyret, technical analyst at ActivTrades.

“Investors are likely to now wait for clear direction and action from central banks rather than relying on rumors and semantics. That said, equity markets may consolidate in a lower volatility environment as investors will wait for next week’s data (US/EU/UK CPI) before bringing significant adjustments to their risk exposure,” Veyret added.

U.S. consumer price data for November will be released next Tuesday.

Investors will be looking out for more Fed comments on Friday, with Dallas Fed President Lorie Logan speaking at 7:30 a.m., Atlanta Fed Pres. Raphael Bostic at 9 a.m., then San Francisco Fed Pres. Mary Daly at 1 p.m. In between, the University of Michigan’s preliminary consumer sentiment survey for November will be released at 10 a.m., all times Eastern.

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