US stock futures fell on Thursday as a renewed bond sell-off and another rise in oil overshadowed hopes that the Trump-Xi summit could steady US-China relations.
Nasdaq 100 futures were down over 300 points, or about 1% around, S&P 500 futures lost 0.6% and Dow futures slipped 0.3%.
The 10-year Treasury yield remained above 5%, while the 30-year yield climbed to its highest since 2004.
Brent crude also stayed above $100 as US-Iran tensions remained unresolved. Investors now face a mix of geopolitics, rate risk and fading momentum in this week’s AI winners.
5 things to know before Wall Street opens
1. The bond market is becoming Wall Street’s biggest problem
Wednesday’s sell-off pushed the 10-year Treasury yield to 5.11%, its highest close since 2007, after stronger US business activity, hawkish Fed commentary and a weak five-year auction.
On Thursday, the 30-year yield climbed to 5.444%, the highest since 2004.
Nasdaq futures are underperforming as investors reconsider valuations built around strong AI earnings growth.
Standard Chartered US rates strategist John Davies told Barron’s that the 10-year yield could reach 5.5% over the next year as inflation, fiscal concerns and heavy investment keep term premiums elevated.
2. Trump-Xi summit is about avoiding a new shock
Donald Trump and Xi Jinping meet in Washington on Thursday after the US and China agreed to extend their tariff truce by two months to January 10, 2027.
Trade, rare earths, AI, Taiwan and Iran are all expected to feature.
The immediate market objective is avoiding another escalation in tariffs or technology controls rather than securing a sweeping agreement.
The two sides have also discussed an AI incident-notification mechanism as competition in advanced technology intensifies.
3. Oil above $100 is hitting airlines and the rate trade
Brent crude remained above $102 after US-Iran exchanges at the UN dashed some optimism around a quick diplomatic breakthrough.
Expensive fuel squeezes transport margins and reinforces inflation concerns.
JetBlue and United fell more than 1% in premarket trading, while Norwegian Cruise and Royal Caribbean also declined.
Cboe strategist Mandy Xu told MarketWatch earlier this week that the relationship between oil and Treasury yields is near its strongest in decades, making Middle East headlines unusually important for bonds.
4. AI winners are finally feeling the yield squeeze
Meta fell about 2% before the bell, Nvidia lost around 1%, while Intel and Marvell dropped roughly 3%.
The reversal comes after AI stocks powered the Nasdaq to records earlier this week.
Meta remains central to the theme after unveiling Charm, a small device built around its Muse AI assistant, but Thursday’s action shows enthusiasm being tested by yields above 5%.
MGM Resorts was another standout mover, dropping about 8% after People Incorporated withdrew its $48.30-a-share takeover proposal.
5. Jobless claims and Fed speakers could push hike odds higher
Initial jobless claims are due at 8:30 am ET, with economists expecting about 201,000 filings after 196,000 the previous week. New home sales follow at 10 am.
New York Fed President John Williams said Thursday that another rate increase this year remains a reasonable possibility.
Cleveland Fed President Beth Hammack and Philadelphia Fed President Anna Paulson are also scheduled to speak.
Markets now assign roughly a 71% probability to another quarter-point increase in October. A strong labour reading could keep pressure on equity valuations.
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