Stock Index Futures Climb as Bond Yields Stabilize, U.S. PMI Data in Focus

September S&P 500 E-Mini futures (ESU26) are up +0.33%, and September Nasdaq 100 E-Mini futures (NQU26) are up +0.62% this morning, signaling a rebound from yesterday’s selloff on Wall Street as bond yields showed tentative signs of stabilization.

Chipmakers and the Magnificent Seven stocks edged higher in pre-market trading, providing support to stock index futures.

Treasuries were little changed on Friday, steadying after sharp selloffs earlier this week. The 10-year T-note yield fell 0.5 basis points to 4.70%. Still, concerns about the U.S. budget deficit and the possibility that elevated oil prices could fuel a prolonged period of high inflation persist, leaving a risk that yields could remain near recent highs or climb further.

The price of WTI crude wavered on Friday as investors awaited details of a U.S. campaign to isolate Iran’s economy, with prospects for a near-term resolution to the Middle East conflict and the reopening of the Strait of Hormuz remaining remote. U.S. Treasury Secretary Scott Bessent said on Thursday that the administration would unveil details of the initiative next Monday after President Trump characterized the effort as an “economic D-day.”

Market participants are now awaiting U.S. business activity data.

In yesterday’s trading session, Wall Street’s major indices closed lower. Walmart (WMT) sank over -9% and was the top percentage loser on the Dow and Nasdaq 100 after the retailer posted weaker-than-expected U.S. comparable sales growth in the second quarter. Also, cybersecurity stocks declined after Axios reported that CrowdStrike’s chief technology officer was leaving the company to launch an AI-cyber fund, with CrowdStrike Holdings (CRWD) sliding over -5% and Okta (OKTA) dropping more than -4%. In addition, Advance Auto Parts (AAP) tanked over -24% after the auto-parts retailer reported an unexpected drop in Q2 comparable sales. On the bullish side, Nordson (NDSN) climbed +8% and was the top percentage gainer on the S&P 500 after the industrial technology company reported better-than-expected FQ3 results and raised its full-year guidance.

Economic reports released on Thursday were better than expected. The number of Americans filing for initial jobless claims in the past week fell by -6K to 206K, compared with the 210K expected, indicating that the labor market remains resilient despite an unexpected drop in employment in July. Also, the U.S. Philly Fed manufacturing index unexpectedly rose to a 5-1/4-year high of 47.4 in August, stronger than expectations of 24.1. In addition, the Conference Board’s Leading Economic Index for the U.S. rose +0.2% m/m in July, stronger than expectations of +0.1% m/m.

San Francisco Fed President Mary Daly said on Thursday that the U.S. Treasury market appears to be signaling that monetary policy is in a good place right now. “There’s a lot of discussion about our credibility there. I don’t see our credibility at risk,” Daly said. “I also hear a lot about, should we be making preemptive cuts—or hikes, rather? And I don’t see a lot of evidence that that’s an urgent problem to solve.”

St. Louis Fed President Alberto Musalem said the bond market selloff is being fueled by government borrowing and rising financing needs tied to the AI build-out, rather than concerns about the U.S. central bank’s credibility. At the same time, Musalem said he sees an increased likelihood that inflation will not return to the Fed’s 2% target within 18 months without higher interest rates.

U.S. rate futures have priced in a 65.4% chance of no rate change and a 34.6% chance of a 25-basis-point rate hike at next month’s monetary policy meeting.

Meanwhile, UBS Global Wealth Management on Thursday lifted its year-end target for the S&P 500 Index to 8,100, pointing to an improved earnings outlook and expectations for continued profit growth through next year.

Today, investors will focus on preliminary U.S. purchasing managers’ surveys for August, set to be released in a couple of hours. The surveys will provide further insight into the health of the world’s largest economy. Economists expect the August S&P Global Manufacturing PMI to be 54.0 and the S&P Global Services PMI to be 53.9, compared with the previous month’s figures of 53.9 and 54.6, respectively.

Once the PMI data are out, investor attention will shift to a packed week ahead. Fed Chairman Kevin Warsh will deliver a speech at the Jackson Hole Economic Policy Symposium, Nvidia (NVDA) will report earnings, and the July core personal consumption expenditures price index, the Fed’s preferred inflation gauge, will be released.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.70%, down -0.11%.

The Euro Stoxx 50 Index is up +0.26% this morning, supported by gains in mining and banking stocks. Mining stocks led the gains on Friday, boosted by higher gold prices. Bank stocks also climbed. At the same time, healthcare stocks slid. Despite Friday’s gains, the benchmark index is on track for a weekly loss. A survey released on Friday showed that Eurozone business activity expanded at its fastest pace this year in August, supported by stronger new orders, particularly in manufacturing, and a rebound in export growth. “The manufacturing sector is again the star performer ... with the services economy providing a supporting role, notching up another month of decent growth after the malaise seen in the second quarter,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. Elsewhere, Eurozone government bond yields were steady to slightly lower on Friday, showing tentative signs of stabilization after a week marked by turmoil in global bond markets. In corporate news, Nibe Industrier (NIBEB.S.DX) surged over +7% after the Swedish heat pump maker reported higher net income in the second quarter.

U.K. Retail Sales, U.K. Core Retail Sales, Eurozone’s Composite PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), and Eurozone’s Services PMI (preliminary) were released today.

U.K. July Retail Sales fell -0.5% m/m and rose +1.6% y/y, weaker than expectations of -0.4% m/m and +2.2% y/y.

U.K. July Core Retail Sales fell -0.9% m/m and rose +2.3% y/y, weaker than expectations of -0.5% m/m and +3.3% y/y.

Eurozone’s August Composite PMI stood at 52.1, stronger than expectations of 51.7.

Eurozone’s August Manufacturing PMI came in at 52.8, stronger than expectations of 51.8.

Eurozone’s August Services PMI arrived at 51.7, stronger than expectations of 51.5.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.04%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.30%.

China’s Shanghai Composite Index closed just above the flatline today as investors remained hopeful of additional fiscal support. Non-ferrous metal stocks were among the biggest gainers on Friday, tracking a rise in gold prices. Chinese Vice Finance Minister Liao Min said on Friday that the country will introduce additional fiscal policy measures in response to economic conditions, as growth loses momentum in the world’s second-largest economy. “We’ve been studying and drafting new coordinated fiscal and financial policies that will be introduced in the second half of this year,” Liao said at a briefing. In addition, the finance ministry said China has expanded loan interest subsidies for small private businesses and consumers. However, the Shanghai Composite Index showed little reaction to Liao’s remarks. “The muted reaction suggests policy expectations are already elevated, and investors still want clearer evidence of stronger domestic demand before adding risk,” said Wee Khoon Chong at BNY. The benchmark index notched a modest weekly loss. In corporate news, Pop Mart International fell over -3% in Hong Kong after the Labubu doll maker signaled it may fall short of its full-year revenue target after first-half results came in below expectations. Investor attention now shifts to the National People’s Congress Standing Committee meeting in Beijing on August 25-28.

Japan’s Nikkei 225 Stock Index closed lower today, tracking overnight losses on Wall Street after bond yields resumed their climb. Japanese government bonds fell on Friday, following Thursday’s decline in U.S. Treasuries. Retail stocks were among the biggest laggards after America’s largest retailer Walmart slumped on disappointing sales. Fast Retailing, operator of the Uniqlo clothing chain and a major Nikkei constituent, fell over -3%, weighing heavily on the benchmark index. Pharmaceutical and software stocks also slid. The Nikkei posted its biggest weekly drop in more than a month. Meanwhile, the yen edged higher after data showed Japan’s core consumer inflation picked up in July as the energy shock stemming from the Middle East conflict spread across goods, keeping the Bank of Japan on course for another near-term interest rate hike. “Today’s data backs BOJ’s concerns over inflation. Given recent data and BOJ’s communications, it’s reasonable to have a base case for BOJ’s hike in September,” said Yoshiki Shinke at Daiichi Life Research Institute. Separately, a survey showed that growth in Japan’s manufacturing sector accelerated in August as new orders rose at their fastest pace since January 2018. In corporate news, Lintec Corp. fell over -4% after its largest shareholder, Nippon Paper Industries, announced plans to sell its stake in the adhesive maker. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -4.38% to 28.38.

The Japanese July National Core CPI rose +1.8% y/y, in line with expectations.

The Japanese August S&P Global Manufacturing PMI (preliminary) stood at 55.1, in line with expectations.

Pre-Market U.S. Stock Movers

The Magnificent Seven stocks edged higher in pre-market trading, with Tesla (TSLA) and Meta Platforms (META) gaining about +1%.

Chip and AI infrastructure stocks advanced in pre-market trading, with Marvell Technology (MRVL) and Intel (INTC) rising over +1%.

Cryptocurrency-exposed stocks surged in pre-market trading as Bitcoin neared the $78,000 mark. Strategy (MSTR) was up over +10%, while Coinbase Global (COIN) and MARA Holdings (MARA) were up more than +5%.

Ross Stores (ROST) climbed over +8% in pre-market trading after the off-price retailer reported better-than-expected Q2 results and raised its full-year EPS guidance.

OSI Systems (OSIS) plunged more than -13% in pre-market trading after the company posted weaker-than-expected FQ4 revenue and issued soft FY27 guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - August 21st

Ubiquiti (UI), BJ’s Wholesale Club Holdings (BJ), The Buckle (BKE), Versamet Royalties (VMET), Obsidian Therapeutics (OBX), Apartment Investment and Management Company (AIV), Newegg Commerce (NEGG).