Stocks Muted Before the Open as Treasury Rally Fades, U.S. Economic Data on Tap

September S&P 500 E-Mini futures (ESU26) are down -0.03%, and September Nasdaq 100 E-Mini futures (NQU26) are up +0.05% this morning, struggling for direction as a rebound in Treasuries ran out of steam.

Treasuries resumed their decline on Thursday as the boost from the U.S. Treasury’s decision to increase buyback volumes for long-end securities faded. Long-end Treasury yields initially fell in Asian and early European trading before reversing course. The 10-year T-note yield rose two basis points to 4.67%, while the 30-year T-note yield advanced three basis points to 5.22%. The rebound in yields came amid lingering concerns about inflation and swelling government debt.

The price of WTI crude climbed over +3% on Thursday, extending gains for a fifth straight day, after U.S. President Trump said he would launch a major economic campaign against Iran. “This will be Economic Warfare and Isolation on an unprecedented scale,” Trump wrote in a Truth Social post. Trump said that any country allowing financial institutions, businesses, airports, or government entities to support Iran would face severe economic consequences. However, Trump did not detail what measures he would pursue or which countries would be targeted.

Investors are now awaiting a new round of U.S. economic data.

In yesterday’s trading session, Wall Street’s three main equity benchmarks ended in the green. Moderna (MRNA) popped over +176% and was the top percentage gainer on the S&P 500 after the company said its experimental mRNA-based treatment, developed in partnership with Merck, succeeded in a late-stage trial involving high-risk melanoma patients. Also, cryptocurrency-exposed stocks jumped as Bitcoin rallied, with Strategy (MSTR) surging over +12% to lead gainers in the Nasdaq 100 and Coinbase Global (COIN) climbing more than +9%. In addition, Estee Lauder (EL) surged over +16% after the beauty and cosmetics giant reported better-than-expected FQ4 results. On the bearish side, chip and AI infrastructure stocks slid, with Seagate Technology Holdings (STX) falling over -7% to lead losers in the S&P 500 and Lam Research (LRCX) dropping more than -6%.

The minutes of the Federal Open Market Committee’s July 28-29 meeting, released on Wednesday, showed that several officials favored a rate hike last month and “many” assessed that tightening would “likely be necessary” if inflation didn’t decline. “With regard to the outlook for monetary policy, participants reiterated that their interpretations of incoming information would be a key component of their deliberations,” according to the FOMC minutes. Much of the discussion at the July meeting focused on differing views of the inflation outlook. “Most participants anticipated that inflation would step down over the rest of the year as the effects of tariffs and earlier energy price increases wane, but many participants noted the possibility that inflation might be more persistently elevated,” the minutes said.

Meanwhile, U.S. rate futures have priced in a 66.4% probability of no rate change and a 33.6% chance of a 25-basis-point rate hike at the next FOMC meeting in September.

Today, investors will focus on U.S. Initial Jobless Claims data, set to be released in a couple of hours. Economists expect this figure to come in at 210K, compared with last week’s number of 209K.

The U.S. Philadelphia Fed Manufacturing Index will also be released today. Economists anticipate that the Philly Fed manufacturing index will stand at 24.1 in August, compared with last month’s figure of 41.4.

The Conference Board’s Leading Economic Index for the U.S. will be released today as well. Economists project the July figure to rise +0.1% m/m, following a -0.2% m/m drop in June.

On the earnings front, consumer bellwether Walmart (WMT), agriculture-equipment maker Deere (DE), and off-price retailer Ross Stores (ROST) are set to report their quarterly results today.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.67%, up +0.49%.

The Euro Stoxx 50 Index is down -0.27% this morning, extending its losing streak to a fifth session as higher oil prices renewed inflation concerns. Mining stocks led the declines on Thursday, following a pullback in gold prices amid profit-taking. Travel and leisure stocks also slid as rising oil prices fueled concerns about higher fuel costs. At the same time, automobile stocks climbed, limiting the broader market’s losses. Meanwhile, Eurozone government bond yields were mixed on Thursday as a rebound in long-dated Treasuries lost momentum. Elsewhere, Sweden’s central bank kept its key policy rate unchanged at 1.75% on Thursday and said a rate hike remains possible later this year as it warned that the Middle East conflict could push inflation higher. In corporate news, JD Sports Fashion (JD-.LN) tumbled over -15% after the sportswear retailer cut its full-year profit guidance. At the same time, Novonesis (NSISB.C.DX) surged over +9% after the biosolutions maker reported stronger-than-expected Q2 results, boosted its annual guidance, and announced a share buyback.

Germany’s PPI data was released today.

The German July PPI rose +1.1% m/m and +3.0% y/y, stronger than expectations of +0.5% m/m and +2.7% y/y.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.24%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.36%.

China’s Shanghai Composite Index closed higher today, supported by gains in healthcare and tech stocks. Healthcare stocks jumped on Thursday following news that an experimental mRNA-based cancer vaccine developed by Moderna and Merck succeeded in a late-stage trial for the deadly skin cancer melanoma. Technology stocks also advanced, tracking gains in regional peers. In addition, sentiment was buoyed by a fresh wave of Chinese companies, including Foxconn Industrial Internet and CCCC Design & Consulting, announcing share buybacks. Meanwhile, China left its benchmark lending rates unchanged on Thursday, as widely expected, despite data indicating that economic activity lost steam at the start of the third quarter. The one-year loan prime rate was left unchanged at 3.00%, while the five-year LPR remained at 3.50%, according to the People’s Bank of China. Elsewhere, Shanghai authorities said on Thursday that the city will relax some property policies starting Friday, including measures related to mortgages, the housing provident fund, and purchase subsidies, in an effort to bolster demand. In corporate news, Kuaishou Technology sank over -11% in Hong Kong after the short-video platform operator reported a drop in Q2 net profit.

Japan’s Nikkei 225 Stock Index closed higher today as easing pressure from the bond market boosted sentiment. Japanese government bonds climbed on Thursday, following an overnight rally in U.S. Treasuries after the U.S. Treasury announced an increase in buyback volumes for long-end securities. Automobile, software, and pharmaceutical stocks were among the biggest gainers on Thursday. “The fall in interest rates is undoubtedly the key factor driving the market today. It is notable that shares and sectors which had previously lagged behind the rise in AI and semiconductor-related stocks are now showing significant gains,” said Wataru Akiyama at Nomura Securities. Strong export data from the country added to the positive mood. Japan’s exports rose for the 11th consecutive month in July, buoyed by robust semiconductor-related demand. Meanwhile, the nation’s imports reached a monthly record in July as higher oil prices pushed up energy costs. Elsewhere, foreign investors bought a net 621.2 billion yen worth of Japanese stocks in the week through August 15th, ending a two-week selling streak, according to Ministry of Finance data. Investor focus is now squarely on Japan’s July National Core CPI, due on Friday, which is expected to show a modest pickup—a result that would keep the BOJ on course to raise rates as soon as next month. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -8.51% to 29.68.

The Japanese July Trade Balance stood at -634.5 billion yen, stronger than expectations of -680 billion yen.

The Japanese July Exports rose +23.2% y/y, stronger than expectations of +19.9% y/y.

The Japanese July Imports rose +27.8% y/y, stronger than expectations of +26.5% y/y.

Pre-Market U.S. Stock Movers

Cryptocurrency-exposed stocks climbed in pre-market trading as Bitcoin extended its rally. Strategy (MSTR) was up over +9%, Coinbase Global (COIN) was up more than +7%, and MARA Holdings (MARA) was up over +5%.

Energy stocks advanced in pre-market trading as oil prices extended their gains, with APA Corp. (APA) and Occidental Petroleum (OXY) rising over +1%.

Etsy (ETSY) gained more than +3% in pre-market trading after BofA upgraded the stock to Buy from Neutral with a price target of $105.

Wolfspeed (WOLF) plunged more than -13% in pre-market trading after the company provided soft FQ1 revenue guidance.

The TJX Companies (TJX) fell over -1% in pre-market trading after Citi downgraded the stock to Neutral from Buy.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - August 20th

Walmart (WMT), Deere & Company (DE), Ross Stores (ROST), OSI Systems (OSIS), Advance Auto Parts (AAP), Navios Maritime Partners (NMM), Flowers Foods (FLO), AIR Global (AIIR), Prospect Capital (PSEC), ScanSource (SCSC), LSI Industries (LYTS), Bright Minds Biosciences (DRUG), Santacruz Silver Mining (SCZM), Hovnanian Enterprises (HOV), Blue Moon Metals (BMM), Twin Disc (TWIN), NovaBridge Biosciences (NBP).