Dow futures fall; rising Treasury yields, Middle East tensions weigh

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Dow futures fall; rising Treasury yields, Middle East tensions weigh
Credit: © Reuters.

Investing.com -- U.S. stock futures edged lower Friday, pressured by rising bond yields and elevated geopolitical tensions in the MIddle East.

By 06:30 ET (10:30 GMT), the Dow Futures contract was down 90 points, or 0.3%, S&P 500 Futures traded 12 points, or 0.3%, lower and Nasdaq 100 Futures dropped 50 points, or 0.4%.

Yields climb in wake of Powell’s speech

The main indices on Wall Street closed sharply lower Thursday after the benchmark 10-year Treasury yield climbed to 5%, its highest level since the financial crisis in 2007.

This followed a speech by Fed chair Jerome Powell, who indicated that signs of above-trend growth or a too-strong labor market could warrant more monetary tightening. He also mentioned emerging risks and a need to move with care, but investors have become very wary about the potential for rates staying high for longer.

The 30-stock Dow Jones Industrial Average closed 250 points, or 0.8%, lower, while the benchmark S&P 500 fell 0.9% and the tech-heavy Nasdaq Composite dropped 1%.

The major averages are also on pace for losses on the week. The S&P 500 is down 1.2% through Thursday’s close, while the Nasdaq Composite is off 1.7% and the Dow Jones Industrial Average is down nearly 0.8%. 

Biden seeks to ramp up aid for Israel

Israel continued to bombard Gaza, preparing a ground invasion of the region as part of its plan to wipe out the Hamas Islamist group, after the deadly attacks on Israeli citizens on Oct. 7.

U.S. President Joe Biden, on Thursday, asked Americans in a televised speech to spend billions more dollars to help Israel fight Hamas.

Concerns remain that the conflict could spread further in the volatile region, especially after the Pentagon said U.S. forces intercepted three cruise missiles and several drones launched by the Houthi movement in Yemen, potentially toward Israel.

The Houthi, like Hamas in Gaza and Lebanon's Hezbollah, are backed by Iran.

SolarEdge cuts third-quarter revenue guidance

There are more earnings to digest during the session, including numbers from financial giant American Express (NYSE: AXP ), regional banks Regions Financial (NYSE: RF ) and Comerica (NYSE: CMA ) as well as oilfield services company Schlumberger (NYSE: SLB ).

SolarEdge Technologies (NASDAQ: SEDG ) stock slumped almost 25% in premarket trading after the renewable energy company cut its third-quarter revenue guidance. 

On the flip side, Knight-Swift Transportation (NYSE: KNX ) stock rose over 17% after the trucking giant beat estimates in the third quarter on both the top and bottom lines.   

Elsewhere, the economic data slate is largely empty Friday, although appearances from Fed officials Loretta Mester and Patrick Harker will attract attention in the wake of Jerome Powell’s speech and as the U.S. central bank’s next policy-setting meeting draws nearer.

Oil gains on planned U.S. SPR refill

Crude prices rose Friday, boosted by the news that the Biden administration plans to begin refilling its strategic oil reserves.

By 06:30 ET, the U.S. crude futures traded 1.4% higher at $89.63 a barrel, while the Brent contract climbed 1.2% to $93.50 a barrel.

Both contracts are on course for a second consecutive positive week, with gains of between 1.5% and 2.2%, as the Israel-Hamas conflict prompted concerns of a disruption to supply in this important oil-rich region.

The market also received a boost after the U.S. Department of Energy announced two separate offers of crude purchases on Thursday totaling 6 million barrels, as President Biden revived his bid to refill the heavily-drawn Strategic Petroleum Reserve.

The U.S. government had drawn about 200 million barrels from the SPR since early-2022, bringing the reserve to its lowest level in nearly 40 years in a bid to combat high gasoline prices following the onset of the Russia-Ukraine war. 

(Oliver Gray contributed to this item.)

 

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