US stock futures traded lower early Thursday, a day after the S&P 500 pulled back from the record high it had set just 24 hours earlier, according to CNBC. Dow Jones Industrial Average futures were down 132 basis points, or 0.26%, while S&P 500 futures slipped 0.15% and Nasdaq-100 futures fell 0.21%.
The retreat followed a losing session on Wall Street. The S&P 500 shed 0.2%, the Dow dropped more than 340 points, or 0.7%, and the Nasdaq Composite lost 0.2%, CNBC reported.
Why it matters
Rising bond yields have been weighing on equities for weeks, and the pullback shows how sensitive the market has become to borrowing costs. The 10-year Treasury note yield was last up 4 basis points at 5.3178%, while the 30-year yield gained 4 basis points to 5.7064% — levels that have dented demand for stocks, particularly in sectors most exposed to higher financing costs. Industrials are the worst-performing sector so far this week, according to CNBC.
A solid auction, but yields stay elevated
The Treasury sold $39 billion of 10-year notes on Wednesday, and the auction drew strong interest. Indirect bidders, a group that includes global central banks, took more than 80% of the sale, above the 72.4% average across the last ten auctions, CNBC reported. That demand helped the 10-year yield ease off a 24-year high during Wednesday's session.
The Treasury is scheduled to sell $22 billion of 30-year bonds later Thursday, a sale investors will watch closely for further signals on demand.
Levi Strauss cuts revenue outlook
Levi Strauss shares fell almost 2% in extended trading after the denim retailer lowered its full-year revenue growth guidance, though it raised its profit outlook, according to CNBC.
Asia closes lower across the board
Asian markets ended Thursday's session in negative territory. Japan's Nikkei 225 closed 1.42% lower at 69,042.11, and the broader Topix dropped 1.51% to 4,091.46. South Korea's Kospi fell 2.62% to 6,625.93, while the small- and mid-cap Kosdaq lost 0.69% to 892.27.
Hong Kong's Hang Seng index was down 1.43% in its final hour of trade. Mainland China's CSI 300 closed 1.09% lower at 4,310.28. Australia's benchmark S&P/ASX 200 fell 0.77%.
Europe opens lower, oil and gas the lone gainer
European stocks started Thursday lower. The pan-European Stoxx 600 was 1.07% lower shortly after 8:00 a.m. in London, CNBC reported. The U.K.'s FTSE 100 fell 0.81%, France's CAC 40 dropped 0.85%, Germany's DAX lost 1.08% and Italy's FTSE MIB was 1.53% lower.
Oil and gas was the only sector in positive territory, up 0.32%, while basic resources led losses with a 2.02% slide. European banks fell 1.82% and healthcare stocks dropped 1.45%. Ahead of the open, Stoxx 50 futures were down 0.35%, with the CAC 40 seen 0.06% lower, the DAX down 0.27% and the FTSE 100 off 0.14%.
French central bank chief points to energy-driven inflation
Bank of France Governor Emmanuel Moulin said Thursday that European inflation is "100%" driven by energy, adding that a geopolitical shock is now feeding into a financial shock, according to CNBC. Moulin, who sits on the European Central Bank's board, noted a "strong correlation" between oil prices, long-term US interest rates and European rates, as yields on French government debt climbed to multiyear highs amid broader worries about fiscal pressure in several European countries.
Fellow ECB board member Olaf Sleijpen, who heads the Dutch central bank, said medium- to long-term inflation expectations remain "well anchored."
HSBC shares fall on reported UK job cuts
HSBC's Hong Kong-listed shares dropped 3.9% Thursday after a report that the lender plans job cuts in its UK wealth management business. The Financial Times reported that the reductions will include a sharp cut in specialist staff and financial advisors as part of the bank's push to expand AI integration. HSBC is in a "consultation period" over the proposed changes, and affected employees are likely to leave at the end of the month, according to the FT report cited by CNBC.
Oil climbs on Middle East tensions
Oil prices rose Thursday as Middle East concerns kept markets uneasy. Brent crude futures for December delivery gained 1.36% to $101.54 a barrel, while US West Texas Intermediate futures for November advanced 1.04% to $89.32 a barrel.
NBC News reported, citing sources, that President Donald Trump and his national security team have discussed possibly restarting large-scale US military operations in Iran in the coming weeks, including the option of strikes before next month's midterm elections.
Earnings season in focus
Despite the yield pressure, many investors remain optimistic that the coming earnings season can give the market fresh momentum. FactSet data cited by CNBC shows the S&P 500 is expected to post a blended earnings growth rate of roughly 30% for the third quarter, which would mark a third consecutive quarter of growth above 25%.
"If earnings remain strong, and the idea is that they probably will, if expectations are met and/or higher, that is going to sustain this rally — despite the fact that rates are higher," Courtney Garcia, senior wealth advisor at Payne Capital Management, told CNBC's "Closing Bell." "It's not going to derail the market."
Investors will get an early read on Thursday when PepsiCo reports results before the opening bell. Weekly jobless claims data is also due.
The next signals to watch are PepsiCo's numbers, the jobless claims print and the $22 billion 30-year Treasury auction — each of which could shape whether stocks steady or extend Wednesday's decline.
