Pullback By Treasury Yields May Lead To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to extend the rebound seen in the previous session.

Early buying interest may be generated in reaction to a pullback by treasury yields, which are giving back ground after trending higher over the past several sessions.

The yield on the benchmark ten-year note is falling by more than 6 basis points after ending yesterday’s trading unchanged at its highest closing level in well over a year.

Treasury yields saw further downside following the release of a batch of U.S. economic data, including a Labor Department report showing a slight uptick in first-time claims for U.S. unemployment benefits in the week ended August 29th.

The report said initial jobless claims edged up to 206,000, an increase of 2,000 from the previous week’s revised level of 204,000.

Economists had expected jobless claims to inch up to 205,000 from the 203,000 originally reported for the previous week.

However, overall trading activity may be somewhat subdued ahead of the release of the Labor Department’s more closely watched monthly employment report on Friday.

Economists currently expect employment to climb by 55,000 jobs in August after dipping by 23,000 jobs in July, while the unemployment rate is expected to tick up to 4.2 percent from 4.1 percent.

The data could have a significant impact on the outlook for interest rates ahead of the Federal Reserve’s next monetary policy meeting later this month.

“Weaker labor-market figures could strengthen the argument for patience, while resilience in employment alongside sticky inflation would make the hawkish case increasingly difficult to dismiss,” said Daniela Hathorn, Senior Market Analyst at Capital.com.

She added, “Investors have been remarkably resilient so far, but that resilience is likely to be tested if oil, yields and expectations for Fed tightening begin moving higher simultaneously.”

Stocks moved mostly higher during trading on Wednesday, regaining ground following the pullback seen over the three previous sessions. The major averages all moved back to the upside, although buying interest appeared somewhat subdued.

The major averages all finished the day firmly in positive territory. The Dow climbed 295.07 points or 0.6 percent to 53,061.95, the Nasdaq rose 118.05 points or 0.5 percent to 26,217.82 and the S&P 500 increased 35.13 points or 0.5 percent to 7,666.60.

The strength on Wall Street may partly have reflected bargain hunting following the recent slump, which dragged the S&P 500 down to its lowest levels in nearly a month.

Early buying interest was also generated in reaction to a pullback by crude oil prices and treasury yields, although stocks saw continued strength even as oil prices and yields recovered higher.

Even as yields bounced well off their early lows, a report from payroll processor ADP showing weaker than expected private sector job growth may have eased concerns about the outlook for interest rates.

ADP said private sector employment rose by 38,000 jobs in August after climbing by an upwardly revised 46,000 jobs in July.

Economists had expected private sector employment to grow by 48,000 jobs compared to the addition of 44,000 jobs originally reported for the previous month.

The modest increase in August reflected the slowest pace of job creation since private sector employers added just 11,000 jobs in January.

Traders may be hopeful that signs of weakness in the labor market will lead the Federal Reserve to refrain from raising interest rates later this month even amid concerns about inflation.

On Friday, the Labor Department is scheduled to release its more closely watched monthly report on employment, which includes both public and private sector jobs.

Economists currently expect employment to climb by 55,000 jobs in August after dipping by 23,000 jobs in July, while the unemployment rate is expected to tick up to 4.2 percent from 4.1 percent.

Gold stocks moved sharply higher amid a rebound by the price of crude oil, resulting in a 2.9 percent surge by the NYSE Arca Gold Bugs Index.

Substantial strength was also visible among oil service stocks, as reflected by the 2.4 percent jump by the Philadelphia Oil Service Index.

Telecom, airline and biotechnology stocks also saw significant strength, while software stocks showed a notable move to the downside.

Commodity, Currency Markets

Crude oil futures are jumping $1.30 to $92.31 a barrel after climbing $0.79 to $91.01 a barrel on Wednesday. Meanwhile, after rising $18.20 to $4,414.60 an ounce in the previous session, gold futures are surging $93.40 to $4,508 an ounce.

On the currency front, the U.S. dollar is trading at 155.55 yen versus the 158.70 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1619 compared to yesterday’s $1.1587.

Asia

Asian stocks ended on a muted note on Thursday as lower oil prices and bond yields offset a mixed set of earnings results from Broadcom.

The California-based chip and infrastructure software firm delivered record-breaking results for its fiscal third quarter but forecast quarterly revenue below Wall Street expectations.

U.S. Treasury yields eased from multi-year highs and oil steadied after a three-day rally, helping support regional sentiment to some extent. The U.S. dollar index pulled back sharply ahead of the August jobs report scheduled for Friday.

China’s Shanghai Composite Index finished marginally higher at 3,942.09 as Beijing tightened tax rules on the sale of restricted shares. Hong Kong’s Hang Seng Index fell 0.4 percent to 25,213.31.

Japanese markets ended slightly lower on interest rate concerns after BoJ board member Hajime Takata said the central bank should adjust interest rates nimbly to counter intensifying inflationary pressures.

Helping limit overall losses, a survey showed the Japanese service sector expanded at its fastest pace since March in August, driven by strong domestic demand.

The Nikkei 225 Index ended a range-bound session 0.2 percent lower at 64,214.48 ahead of the auction of around 600 billion yen of 30-year government bonds later in the day. The broader Topix Index settled half a percent lower at 4,102.04.

Among the prominent decliners, cable and optical fiber producer Fujikura fell 2.7 percent, oil and gas explorer Inpex slumped 4 percent and Uniqlo operator Fast Retailing tumbled 3.4 percent.

Seoul stocks ended modestly higher after sharp volatility as semiconductor stocks extended losses.

The Kospi Index closed 0.3 percent higher at 6,579.48, with Samsung Life Insurance, LG Energy Solution and KB Financial Group surging 3-5 percent.

Australian markets advanced, led by banks and mining stocks. The benchmark S&P/ASX 200 Index rose 0.5 percent to 9,020.10, snapping a three-day losing streak. The broader All Ordinaries Index ended up 0.4 percent at 9,198.30.

Corporate Travel Management shares nosedived nearly 86 percent to hit a 14-year low as the business relisted on the ASX after remaining suspended from trade since August 2025 amid an auditing scandal.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index fell 0.6 percent to 13,846.18 after data showed the country’s merchandize terms of trade fell more than expected in the three months to June 2026.

Europe

European stocks are broadly higher on Thursday as U.S. Treasury yields dipped and oil steadied after a three-day rally, helping ease oil-driven inflation and interest rate concerns.

Brent crude futures were little changed below $96 a barrel after U.S. President Donald Trump said that a new wave of U.S. attacks on Iran would likely be short-lived.

The pan-European STOXX 600 Index is up by 0.3 percent after closing 0.2 percent lower on Wednesday.

The U.K.’s FTSE 100 Index is up by 0.7 percent and the German DAX Index is up by 0.2 percent, although the French CAC 40 Index has bucked the uptrend and dipped by 0.3 percent.

Among individual stocks, food packing group Hilton Food has soared after raising its full-year adjusted profit guidance.

Finnish telecom equipment maker Nokia has also advanced after opening its first research and development center in Saudi Arabia, dedicated to AI network automation.

Meanwhile, Voltalia shares have plunged. The French renewable energy company revised down its fiscal 2026 outlook to a net loss and suspended fiscal 2027 outlook after reporting a wider loss in the first half of 2026.

Homebuilder Crest Nicholson has also slumped to a record low after it warned of an annual operating loss.

Luxury watch and jewelry retailer Watches of Switzerland has also fallen despite reiterating its full-year revenue and profit targets.

U.S. Economic News

First-time claims for U.S. unemployment benefits crept slightly higher in the week ended August 29th, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims edged up to 206,000, an increase of 2,000 from the previous week’s revised level of 204,000.

Economists had expected jobless claims to inch up to 205,000 from the 203,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also ticked up to 207,250, an increase of 1,500 from the previous week’s revised average of 205,750.

Reflecting a jump in imports and a slump in exports, the Commerce Department released a report on Thursday showing the U.S. trade deficit widened significantly in the month of July.

The Commerce Department said the trade deficit surged to $88.6 billion in July from a revised $71.2 billion in June.

Economists had expected the trade deficit to increase to $83.0 billion from the $73.3 billion originally reported for the previous month.

The wider trade deficit came as the value of imports shot up by 2.8 percent to $399.3 billion, while the value of exports tumbled by 2.1 percent to $310.7 billion.

A separate report released by the Labor Department on Thursday showed the increase in U.S. labor productivity in the second quarter of 2026 was unrevised from the preliminary estimate.

The Labor Department said labor productivity shot up by 1.4 percent in the second quarter, with the unrevised growth in line with expectations.

The report said output surged by 1.7 percent and hours worked rose by 0.3 percent, which was also unrevised from previous estimates.

Meanwhile, the Labor Department said the jump in unit labor costs in the second quarter was downwardly revised to 1.2 percent from 1.3 percent. Economists had expected the increase to be unrevised.

The report said hourly compensation shot up by 2.6 percent compared to the previously reported 2.7 percent surge.

At 10 am ET, the Institute for Supply Management is due to release its report on service sector activity in the month of August. The services PMI is expected to inch up to 54.3 in August from 54.1 in July, with a reading above 50 indicating growth.

The Treasury Department is scheduled to announce the details of this month’s auctions of three-year and ten-year notes and thirty-year bonds at 11 am ET.

At 3 pm ET, Cleveland Federal Reserve President Beth Hammack is due to deliver opening remarks before The Fed Communities webinar “Connecting Communities: When Every Dollar Counts: Worker Perspectives on the Economy.”