Early Thursday morning, U.S. stock index futures slid further downward as surging Treasury yields weighed heavily on technology shares, with investors concentrating heavily on the face-to-face discussions between President Donald Trump and Chinese President Xi Jinping.
S&P 500 futures fell 0.4% to 7,739.75 points by 02:30 ET (06:30 GMT), Nasdaq 100 futures dropped 0.56% to 30,589.75 points, and Dow Jones Industrial Average futures slid 0.28% to 51,731.0 points, according to market data reported by Investing.com.
Treasury Yields Surge Past 5% as Wall Street Hits Friction
Wall Street indexes retreated on Wednesday, sliding 1.1% from record highs hit earlier in the week. The pullback followed a sharp spike in Treasury yields driven by stronger-than-expected purchasing managers index data that highlighted continued resilience in the U.S. economy, raising investor concerns over potential further interest rate hikes by the Federal Reserve.
The 10-year Treasury yield surged past 5% and briefly hit its highest level since 2007. Hawkish commentary from Federal Reserve Governor Michael Barr further underpinned the rising yield environment, which hit high-flying technology stocks especially hard.
Trump and Xi Meet in Washington for High-Stakes Trade and AI Talks
Chinese President Xi Jinping landed in Washington on Wednesday evening and was met by President Donald Trump. The two leaders are scheduled to hold bilateral talks on Thursday, with artificial intelligence and trade topping the agenda.
Ahead of the summit, Chinese Vice Premier He Lifeng held discussions with U.S. Treasury Secretary Scott Bessent, who revealed to Fox News on Wednesday that both Washington and Beijing have decided to push back their current trade truce by a duration of two months, setting the new deadline for early January. Financial markets are closely watching whether Trump and Xi will align on growing calls for stricter AI safety regulations and potential new AI chip sales to China. Traders are also monitoring signals regarding China’s rare earth exports and its commitments to purchasing U.S. agricultural goods.
Oil Prices Rebound on Mideast Tensions and U.S.-Iran Standoff
Market risk appetite took an additional hit from a sharp rebound in oil prices. Hopes for U.S.-Iran diplomacy appeared largely overstated as a standoff in the Strait of Hormuz showed few signs of lifting.
Crude markets reacted to a defiant address delivered by Iranian President Masoud Pezeshkian at the United Nations General Assembly in New York. Separate reports indicated that the U.S. rejected Iran’s latest proposal to reopen the Strait of Hormuz, while U.S. officials downplayed recent diplomatic dialogue with Tehran.
Meta Platforms Unveils Muse AI Agent and Physical Devices
Traders displayed a muted reaction to Meta Platforms Inc unveiling planned features for its Muse artificial intelligence agent alongside a host of new physical AI devices, chiefly smart glasses. Meta shares dipped slightly following the reveal on Wednesday evening.
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Frequently Asked Questions
Why did U.S. stock index futures fall?
Futures fell because a rebound in Treasury yields—pushed past 5% following strong economic data—battered high-flying technology stocks and sparked concerns over potential interest rate hikes.
What is the main focus of the talks between Donald Trump and Xi Jinping?
The bilateral talks in Washington center primarily on bilateral trade, artificial intelligence safety regulations, AI chip sales, rare earth exports, and agricultural purchasing commitments.
How long has the U.S.-China trade truce been extended?
U.S. Treasury Secretary Scott Bessent stated that Washington and Beijing agreed to extend their trade truce by two months to early January.
What caused oil prices to rebound?
Oil prices rebounded due to mounting tensions in the Strait of Hormuz, reports that the U.S. rejected Iran’s latest proposal to reopen the strait, and a defiant UN General Assembly address by Iranian President Masoud Pezeshkian.
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