US Stock Futures Edge Lower as 10-Year Treasury Yield Moves Above 5%: Dow Jones, S&P, Nasdaq, Wall Street
US stock futures pointed to a slightly lower open on Tuesday as the yield on the benchmark 10-year Treasury moved back above 5%, while investors awaited the Federal Reserve’s monetary policy decision.
The 10-year yield reached its highest level since July 2007 amid continued market attention on inflation and the outlook for US interest rates.
Markets widely expect the Federal Reserve to raise rates on Wednesday, with CME Group’s FedWatch Tool indicating a 92.5% probability of a 25-basis-point increase.
Dan Coatsworth, head of markets at AJ Bell, said, “Market commentators have long argued that Treasuries hitting 5% is the trigger for an equity market correction. At this level, investors might wonder what’s the point in holding risky equities when they can get 5% on low-risk government bonds.”
He added, “It is a psychological level and can sometimes act as a warning sign for a market correction rather than be a guaranteed tipping point for equities to slump.”
Oil Prices and Middle East Developments in Focus
Crude oil prices also remained in focus following reports of further Houthi strikes on Saudi Arabia and continued uncertainty over regional supplies.
Oil prices had risen almost 5% early on Monday before giving back part of the advance. October crude futures nevertheless finished the session 1.3% higher.
Saudi Arabia closed a pipeline that bypasses the Strait of Hormuz following a drone attack, while a planned meeting in Oman between Iran and Gulf states concerning the reopening of the strait was postponed.
US President Donald Trump said on Truth Social that Russia and Ukraine had agreed to stop attacks on each other’s energy infrastructure. He also repeated his claims that Iran wants to “make a deal, quickly and badly” and that “oil is flowing through the Hormuz Strait.”
Wall Street Ends Monday Lower
US stocks recovered from their intraday lows on Monday but finished the session in negative territory.
The Nasdaq Composite fell 146.62 points, or 0.6%, to 26,186.41 after declining as much as 1.3% earlier in the session. The S&P 500 dropped 37 points, or 0.5%, to 7,619.98, while the Dow Jones Industrial Average lost 152.09 points, or 0.3%, to 52,421.20.
Semiconductor stocks remained under pressure, with the Philadelphia Semiconductor Index falling 5.9% to its lowest closing level in more than a month.
The NYSE Arca Computer Hardware Index declined 4.8%, while the Philadelphia Oil Service Index fell 4%. Networking, gold and banking stocks also moved lower.
Software stocks moved in the opposite direction, with the Dow Jones U.S. Software Index gaining 3.3%.
AI Development Concerns Add to Technology Focus
Technology shares were also in focus after industry figures called for a slower pace of development in advanced artificial intelligence systems.
Anthropic Chief Executive Dario Amodei wrote, “We must slow the pace at which we improve the capabilities of AI models. Progress will still seem fast, and we must make wise use of the time we gain.”
“The measures I propose to advance the frontier at a safe pace will not be easy,” he added. “But I believe we owe it to humanity to try.”
Investors are now awaiting Wednesday’s Federal Reserve announcement for further indications about the direction of US monetary policy.
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