U.S. Stocks May See Initial Strength On Lower Crude Oil Prices, Treasury Yields

The major U.S. index futures are currently pointing to a sharply higher open on Thursday, with stocks likely to show a strong move back to the upside after coming under pressure late in the previous session.

Traders may once again look to pick up stocks at reduced levels after bargain hunting contributed to early strength on Wednesday before the late-day pullback.

The downturn seen during yesterday’s trading dragged the Dow down to a three-month closing low, while the S&P 500 hit its lowest closing level in well over a month.

Stocks may also benefit from an extended pullback by the price of crude oil, as U.S. crude oil futures tumble by 2.5 percent and drop below $100 a barrel.

U.S. crude oil futures plunged by more than 3 percent on Wednesday amid optimism about the steps Saudi Arabia is taking to avoid supply disruptions after the closure of its key East-West pipeline.

Treasury yields have moved to the downside along with crude oil prices, with the yield on the benchmark ten-year note slumping after ending the previous session roughly flat.

Stocks turned in a strong performance throughout much of the trading day on Wednesday but came under pressure in the latter part of the session. The major averages pulled back well off their highs of the session and into negative territory.

The Dow led the way lower, slumping 631.21 points or 1.2 percent to a three-month closing low of 51,461.90. The S&P 500 fell 33.92 points or 0.5 percent to 7,551.81, its lowest closing level in well over a month, while the tech-heavy Nasdaq posted a more modest loss, edging down 3.15 points or less than a tenth of a percent to 25,978.42.

The late-day weakness that emerged on Wall Street came after the Federal Reserve announced its widely expected decision to raise interest rates for the first time since July 2023.

The Fed said it decided to raise the target range for the federal funds rate by 25 basis points to 3.75 to 4 percent in support of its dual mandate.

In the accompanying statement, the Fed noted that inflation remains elevated and argued today’s rate hike will support a timelier return to the central bank’s 2 percent goal.

Along with the announcement of the Fed’s latest monetary policy decision, officials also provided their latest projections for the economy and interest rates.

The projections show that a majority of Fed officials expect rates to be above 4 percent by the end of 2026, suggesting at least one more rate hike this year.

Selling pressure picked up as Fed Chair Kevin Warsh delivered his post-meeting press conference, with the central bank chief highlighting persistent inflation.

“Our predominant focus is on the price stability side of our mandate. The plain fact is that inflation is too high, and has been for too long,” Warsh said. “This summer’s inflation readings do not tell me that underlying trends have meaningfully improved.”

Earlier in the day, stocks benefitted from bargain hunting following the weakness seen over the two previous sessions.

The early strength also came amid a sharp pullback by crude oil prices, with U.S. crude oil futures tumbling by more than 3 percent.

Oil service stocks moved sharply lower along with the price of crude oil, with the Philadelphia Oil Service Index plummeting by 3.1 percent to its lowest intraday level in over a month.

Substantial weakness also emerged among banking stocks, as reflected by the 2.9 percent plunge by the KBW Bank Index. The index ended the day at a two-month closing low.

Brokerage, housing and gold stocks also came under pressure late in the session, contributing to the downturn by the broader markets.

Commodity, Currency Markets

Crude oil futures are tumbling $2.78 to $99.65 a barrel after plummeting $3.40 to $102.43 a barrel on Wednesday. Meanwhile, after jumping $54.70 to $4,387.50 an ounce in the previous session, gold futures are climbing $20.10 to $4,407.60 an ounce.

On the currency front, the U.S. dollar is trading at 155.63 yen versus the 156.27 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1485 compared to yesterday’s $1.1464.

Asia

Asian stocks ended mixed on Thursday, with Chinese and Hong Kong markets falling ahead of high-level U.S.-China talks scheduled for this weekend. U.S. Treasury Secretary Scott Bessent said the U.S. is open to discussing shared risks with China in upcoming AI talks.

The U.S. dollar index weakened after hitting a fresh seven-week high earlier as the U.S. Federal Reserve raised interest rates for the first time in three years and signaled more increases to curb persistent inflation. Treasury yields also edged lower, helping gold prices surge more than 1 percent above $4,300 an ounce.

Brent crude futures fell nearly 2 percent toward $104 a barrel in Asian trading after reports suggested that U.S. officials held a confidential meeting with Yemen’s Houthis in Oman amid rising Red Sea tensions, spurring new hopes over an easing in Middle East tensions.

Both Brent and WTI contracts fell about $3 a barrel on Wednesday after reports emerged that Saudi Arabia is offering more crude oil to Asian refiners through ship-to-ship transfer off Oman’s Sohar port.

China’s Shanghai Composite Index dipped 0.4 percent to 3,875.60 as caution crept in ahead of next week’s meeting between U.S. President Donald Trump and Chinese President Xi Jinping in Washington.

Analysts expect the leaders to extend a trade truce rather than strike major deals on AI, Iran or Taiwan. Hong Kong’s Hang Seng Index ended 0.4 percent lower at 24,604.29, dragged down by financials and technology stocks.

Japanese markets eked out modest gains as oil prices eased and the yen held losses from the past three sessions.

The Nikkei 225 Index edged up 0.3 percent to 64,136.25 ahead of the Bank of Japan’s monetary policy announcement due on Friday, with the central bank widely expected to raise interest rates. The broader Topix Index closed 0.8 percent higher at 4,094.19.

Tech heavyweights diverged, with SoftBank rising more than 1 percent while Kioxia Holdings fell 1.8 percent.

Seoul stocks ended little changed, with the Kospi finishing marginally lower at 6,715.41 as chip giants struggled. Samsung Electronics slipped 0.4 percent and SK Hynix dropped 0.8 percent.

Australian markets closed higher for a second consecutive session, with financials surging after the yields on long-dated bonds eased from multi-decade highs.

The benchmark S&P/ASX 200 Index rose 0.4 percent to 8,732.40 while the broader All Ordinaries Index settled 0.4 percent higher at 8,910.90.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index jumped 1 percent to 13,756.59 after the release of strong second-quarter GDP data.

Europe

European stocks have edged higher on Thursday, extending gains from the previous session as oil prices retreated and a global bond selloff paused following Wednesday’s hawkish Fed hike.

Brent crude futures fell toward $104 a barrel, extending losses from the previous session as reports of additional Saudi crude cargoes through Oman helped ease supply concerns.

U.S. Treasury yields declined in European trading, reflecting markets’ increased trust in the Federal Reserve’s resolve to bring inflation under control.

The Bank of England left its interest rate unchanged on Thursday despite rising concerns about inflation. The Monetary Policy Committee voted 6-3 to maintain the bank rate at 3.75 percent. Catherine Mann, Megan Greene and Huw Pill sought a quarter-point hike.

While the German DAX Index is up by 1 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both up by 0.8 percent.

German pharma major Bayer was modestly higher after the U.S. FDA approved Kerendia for chronic kidney disease in type-1 diabetes adults.

U.K. fashion retailer Next has also advanced after reporting improved first-half earnings and raising its annual profit guidance.

Wizz Air Holdings has also rallied. The low-cost airline raised its second-quarter revenue per available seat kilometer (RASK) outlook and outlined its medium-term strategy through fiscal 2030, targeting €10 billion in revenue and a 10 percent EBIT margin.

Shares of Volvo Car has also jumped. The Swedish premium carmaker said it plans to launch 13 new and regionally tailored electrified cars by the end of 2030, its largest-ever product offensive.

On the other hand, industrial services provider Bilfinger has nosedived after cutting its 2026 revenue outlook.

U.S. Economic News

A report released by the Labor Department on Thursday showed an unexpected decline in first-time claims for U.S. unemployment benefits in the week ended September 12th.

The Labor Department said initial jobless claims fell to 196,000, a decrease of 10,000 from the previous week’s unrevised level of 206,000. Economists had expected jobless claims to inch up to 208,000.

The report said the less volatile four-week moving average also slipped to 203,250, a decrease of 2,750 from the previous week’s unrevised average of 206,000.

New residential construction in the U.S. unexpectedly saw further downside in the month of August, according to a report released by the Commerce Department on Thursday.

The Commerce Department said housing starts slumped by 2.6 percent to an annual rate of 1.309 million in August after plunging by 9.0 percent to a revised rate of 1.439 million in July.

Economists had expected housing starts to spike by 6.1 percent to an annual rate of 1.315 million from the 1.239 million originally reported for the previous month.

The report said building permits also dove by 2.7 percent to an annual rate of 1.394 million in August after jumping by 4.3 percent to a revised rate of 1.433 million in July.

Building permits, an indicator of future housing demand, were expected to tumble by 2.3 percent to an annual rate of 1.410 million from the 1.443 million originally reported for the previous month.

The Federal Reserve Bank of Philadelphia released a report on Thursday showing a smaller-than-expected pullback by its reading on regional manufacturing activity in the month of September.

The Philly Fed said its diffusion index for current general activity fell to 37.8 in September after climbing to 47.4 in August, although a positive reading still indicates growth. Economists had expected the index to slump to 30.5

Looking ahead, the Philly Fed said its diffusion index for future general activity plummeted to 52.9 in September from 73.6 in August but noted firms continued to expect overall growth over the next six months.

At 10 am ET, the National Association of Realtors is due to release its report on pending home sales in the month of August. Pending home sales are expected to increase by 0.5 percent in August after tumbling by 2.3 percent in July.

The Treasury Department is scheduled to announce the details of this month’s auction of two-year, five-year and seven-year notes at 11 am ET.