U.S. equity futures weakened Thursday as investors weighed early confidence around corporate earnings against renewed concern over inflation and tight financial conditions. The pullback followed a softer Wall Street session that interrupted a recent run near record levels.
At 4:22 p.m. (Bangkok Time), contracts tied to the Dow Jones Industrial Average were down 0.68%, while S&P 500 futures lost 0.32%. Nasdaq-100 futures declined 0.46%, extending the pressure seen after major indexes slipped Wednesday.
In the previous session, the S&P 500 eased 0.22% after reaching a record high a day earlier. The Dow Jones Industrial Average dropped 341.41 points, or 0.66%, and the Nasdaq Composite finished 0.22% lower.
Bond-market moves remained central to equity sentiment. The Treasury sold $39 billion of 10-year notes on Wednesday, with demand supported by indirect bidders, a group that includes foreign central banks. Those buyers took more than 80% of the sale, compared with a 10-year auction average of 72.4%.
The auction helped pull the 10-year Treasury yield back from a 24-year peak during Wednesday trading. Still, yields remained elevated by historical standards, with the 10-year note at 5.34% and the 30-year bond at 5.72%.
The Treasury market faces another test Thursday with a planned $22 billion sale of 30-year bonds.
High borrowing costs have weighed on risk appetite in recent weeks, particularly in areas of the equity market more sensitive to financing conditions. Industrials have been the weakest sector so far this week.
Monetary policy also remains in focus. At the Federal Reserve’s September meeting, policymakers agreed unanimously to lift interest rates, pointing to inflation that remained too high. While recent data have shifted the economic backdrop, inflation continues to be the central issue for the Fed. Federal Reserve Governor Chris Waller is scheduled to speak in Turkey on Thursday, offering views on the policy outlook.
Even with rate concerns, some investors remain constructive on equities. The beginning of the third quarter earnings season is expected to be a key test for whether stocks can regain upward momentum.
PepsiCo’s quarterly report is among the early results investors are watching. FactSet estimates S&P 500 earnings rose 29.5% in the third quarter. If confirmed, that would mark a third straight quarter of profit growth above 25%.
On the data calendar, the Labor Department is due to release weekly initial jobless claims at 8:30 a.m. ET.
