U.S. Stocks May See Initial Strength On Pullback By Crude Oil Prices

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to move to the upside after recovering from early weakness to end the previous session roughly flat.

Early buying interest is likely to be generated in reaction to a significant pullback by the price of crude oil, which had surged over the two previous sessions.

U.S. crude oil futures are tumbling by more than 2 percent on the day after spiking by 4.5 percent over the past two days.

The sharp pullback by crude oil prices comes as traders react to the latest reports about a potential deal to end the prolonged conflict between the U.S. and Iran.

New reports indicate that Iran has submitted a proposal to the U.S. to end the war and reopen the Strait of Hormuz within seven days.

The proposal was delivered to U.S. officials when the two sides met through mediators this week, the Washington Post quoted Iranian Foreign Minister Abbas Araghchi as saying on the sidelines of the UN General Assembly.

Buying interest may be somewhat subdued, however, with a continued increase in treasury yields likely to make some traders wary of making more significant moves.

Extending the surge seen over the two previous sessions, the yield has risen by 2 basis points, once again reaching its highest levels since July 2007.

After showing a significant move to the downside early in the session, stocks showed a notable recovery attempt over the course of the trading day on Thursday. The major averages climbed well off their lows of the session, with the Nasdaq and S&P 500 closing roughly flat.

The tech-heavy Nasdaq inched up 3.34 points or less than a tenth of a percent to 26,939.37, while the S&P 500 edged down 1.90 points or less than a tenth of a percent to 7,704.13.

The narrower Dow climbed well off its worst levels but still closed down 161.61 points or 0.3 percent at 51,349.98.

The rebound from the early slump was triggered in part by a Reuters report indicating U.S. and Iranian negotiators are discussing a phased deal to end the prolonged Middle East conflict.

Citing sources close to the talks, Reuters said the U.S. and Iran are exploring a phased path out of war that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran.

Stocks responded positively to the report even as the price of crude oil gave back some ground but remained sharply higher on the day.

U.S. crude oil futures jumped by 2.7 percent on the day after spiking by 5 percent earlier in the session, keeping buying interest on Wall Street somewhat subdued.

Treasury yields also surged on the day, with the ten-year yield reaching its highest closing level since July 2007 amid the jump in crude oil futures and concerns about inflation and interest rates.

While commodities and bond traders seem to be growing tired of reports of a potential deal and awaiting more concrete developments, stock traders were willing to buy into the optimism once again.

The hopes for an end to the Middle East conflict come despite conflicting speeches by President Donald Trump and Iranian President Masoud Pezeshkian at the UN General Assembly.

Trump threatened to “annihilate” Iran in his remarks, while Pezeshkian condemned what he called “signs of a bullying mentality” from the U.S. and said that Iran would never surrender.

Biotechnology stocks showed a strong move to the upside over the course of the session, driving the NYSE Arca Biotechnology Index up by 1.5 percent.

Some strength also emerged among pharmaceutical stocks, as reflected by the 1 percent gain posted by the NYSE Arca Pharmaceutical Index.

On the other hand, gold stocks saw continued weakness amid a decrease by the price of the precious metal, with the NYSE Arca Gold Bugs Index falling by 1.4 percent.

Transportation stocks also ended the day notably lower amid the surge in crude oil prices, dragging the Dow Jones Transportation Average down by 1.3 percent.

Commodity, Currency Markets

Crude oil futures are plunging $1.97 to $92.64 a barrel after surging $2.45 to $94.61 a barrel on Thursday. Meanwhile, after falling $20.40 to $4,298 an ounce in the previous session, gold futures are climbing $36.90 to $4,334.90 an ounce.

On the currency front, the U.S. dollar is trading at 157.68 yen versus the 158.83 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1398 compared to yesterday’s $1.1379.

Asia

Asian stocks ended mixed in thin trading on Friday, with markets in South Korea, Taiwan and mainland China closed for public holidays.

The U.S. dollar consolidated weekly gains ahead of durable goods orders data for August and the University of Michigan’s consumer sentiment index to be published later in the day.

Gold was marginally higher at $4,278.70 an ounce and headed for a weekly loss, pressured by growing expectations that the Federal Reserve may raise interest rates again in October. Brent crude futures were modestly lower at $106.24 a barrel in Asian trading after a two-day rally.

Hong Kong’s Hang Seng Index slumped 1 percent to 24,510.09, led by technology and AI stocks as investors assessed the Trump-Xi summit’s implications for bilateral relations.

Despite differences over Iran, Taiwan and trade, Trump described the meeting as “great” and hailed the “truly great friendship” he has forged with his counterpart. China’s Ministry of Foreign Affairs described Xi’s visit to the U.S. as a “great visit.”

Japanese markets rallied as a weakening yen outweighed concerns over rising Japanese bond yields. The Nikkei 225 Index hit a new one-month high before closing 1.3 percent higher at 66,364.20. The broader Topix Index shot up 1.3 percent to 4,128.59.

Semiconductor-related companies topped the gainers list, with Kioxia Holdings jumping 2.2 percent, Advantest rallying 2.8 percent and Tokyo Electron surging 4.8 percent.

SoftBank Group shares tumbled 3.2 percent on concerns over AI funding after Oracle invoked force majeure over its Project Jupiter data center in New Mexico, seeking to shield itself from racking up expenses if the facility is delayed beyond 2028.

Australian markets ended lower, with tech, real estate and discretionary stocks falling deeper into correction territory.

The benchmark S&P/ASX 200 Index dropped 0.4 percent to 8,665, reaching its lowest level since 12 June. The broader All Ordinaries Index fell 0.6 percent to 8,845.60.

Lithium miners slumped as Chinese carbonate futures extended their slide. Pathology group Healius jumped 5.6 percent after signing a binding agreement to sell Agilex Biolabs to Novotech for A$160m.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index finished marginally lower at 13,811.11 after a choppy session amid a surge in global bond yields.

Europe

European stocks have advanced on Friday and are on course for a weekly gain as a sell-off in government debt eased and oil prices retreated from recent highs following reports that Iran has submitted a proposal to the United States to end their war and reopen the Strait of Hormuz within seven days.

The proposal was delivered to U.S. officials when the two sides met through mediators this week, the Washington Post quoted Iranian Foreign Minister Abbas Araghchi as saying on the sidelines of the UN General Assembly session in New York.

Investors also assessed the Trump-Xi summit’s implications for bilateral relations.

Despite differences over Iran, Taiwan and trade, Trump described the meeting as “great” and hailed the “truly great friendship” he has forged with his counterpart. China’s Ministry of Foreign Affairs described Xi’s visit to the U.S. as a “great visit.”

In economic news, German consumer confidence is set to fall in October as rising energy prices dragged down income expectations, monthly survey results of the NIM Consumer Climate powered by GfK showed earlier today.

The forward-looking consumer sentiment index fell more-than-expected to -30.6 in October from -26.8 in September. The score was seen at -27.1.

While the German DAX Index is up by 0.7 percent, the U.K.’s FTSE 100 Index is up by 0.3 percent and the French CAC 40 Index is up by 0.2 percent.

In corporate news, Skanska shares have jumped. The Swedish construction company said it has divested the second phase of its office development project H2Offices in Budapest, Hungary.

Ferrexpo, an iron ore company with assets in Ukraine, has also moved to the upside despite reporting a loss for first half of $14.88 million.

Water firm United Utilities has also risen after maintaining its 2026/27 financial guidance and regulatory return targets.

Hunter Group, a Norwegian provider of oil tanker chartering services, has also rallied after promoting its interim Chief Executive Officer, Erik Mathiesen as permanent CEO.

Meanwhile, HelloFresh has moved sharply lower. The German meal-kit company trimmed its outlook for the financial year 2026 after a sharper-than-planned cut in marketing spending undermined customer acquisition.

U.S. Economic News

A report released by the Commerce Department on Friday showed new orders for U.S. manufactured durable goods unexpectedly came in nearly flat in the month of August.

The Commerce Department said durable goods orders were virtually unchanged in August following a downwardly revised 0.9 percent increase in July.

Economists had expected durable goods orders to decrease by 0.4 percent compared to the 1.1 percent jump that had been reported for the previous month.

Excluding a pullback in orders for transportation equipment, durable goods orders rose by 0.3 percent in August after climbing by 0.7 percent in July. Ex-transportation orders were expected to grow by 0.5 percent.

At 9:20 am ET, Kansas City Federal Reserve President Jeffrey Schmid is due to speak on “The Federal Reserve, Financial Innovation and Economic Development” in a moderated chat before the Civic Council of Greater Kansas City Meeting.

The University of Michigan is scheduled to release its revised reading on consumer sentiment in the month of September at 10 am ET. The consumer sentiment index for September is expected to be unrevised from the preliminary reading of 47.8, which was down from 51.7 in August.

At 2 pm ET. Cleveland Federal Reserve President Beth Hammack is due to participate in a policy panel before the Inflation: Drivers and Dynamics Conference 2026.