U.S. Stock Futures Climb as Oil Drops, AI Optimism Returns

December S&P 500 E-Mini futures (ESZ26) are up +0.32%, and December Nasdaq 100 E-Mini futures (NQZ26) are up +0.54% this morning as a retreat in oil prices pushed bond yields lower, while investors’ enthusiasm for the AI trade picked up again.

The price of WTI crude fell over -1% on Friday, snapping a two-day surge as traders weighed signs of diplomatic progress toward ending the Middle East conflict. Reports emerged on Thursday that U.S. and Iranian negotiators discussed a phased agreement under which Tehran would reopen the Strait of Hormuz. Hours later, Iranian Foreign Minister Abbas Araghchi told reporters in New York that Tehran offered Washington a new seven-day proposal to reopen the strait and resume broader negotiations aimed at reaching a final resolution to the war.

Treasuries rose across the curve on Friday as the retreat in oil prices eased inflation concerns. The 10-year T-note yield fell three basis points to 5.18%.

Nasdaq 100 futures outperformed as chip and AI infrastructure stocks advanced in pre-market trading amid renewed investor enthusiasm for AI.

Investors are now looking ahead to a pair of U.S. economic reports and comments from Federal Reserve officials.

In yesterday’s trading session, Wall Street’s major indices ended mostly lower as Treasury yields continued to rise. Some chip and AI infrastructure stocks slid, with Arm Holdings (ARM) falling over -7% to lead losers in the Nasdaq 100 and Western Digital (WDC) dropping more than -4%. Also, Gen Digital (GEN) tumbled over -12% and was the top percentage loser in the S&P 500 after the Financial Times reported that the company made a takeover offer for GoDaddy. In addition, MGM Resorts (MGM) plunged about -11% after Barry Diller’s People Inc. withdrew its offer to acquire the company. On the bullish side, Everpure (P) jumped over +11% and was the top percentage gainer in the S&P 500 after the data-storage solutions company projected that revenue growth would accelerate in fiscal 2028.

Economic data released on Thursday were better than expected. The number of Americans filing initial jobless claims in the past week unexpectedly fell by 1K to a 2-month low of 197K, underscoring continued strength in the labor market. Economists had expected the figure to rise to 201K. Separately, U.S. August new home sales rose +6.4% m/m to an 8-month high of 684K, stronger than expectations of 615K.

Investors also digested remarks from Fed officials. New York Fed President John Williams said on Thursday that it was reasonable to think the U.S. central bank might need to raise interest rates again before year-end given elevated energy prices and strong demand fueled by AI investment. Also, Philadelphia Fed President Anna Paulson said further interest-rate hikes may be necessary to bring inflation back to the central bank’s 2% target. In addition, Cleveland Fed President Beth Hammack said the inflation outlook remains highly uncertain, with risks skewed to the upside. Finally, Richmond Fed President Tom Barkin said persistent cost pressures across the economy this summer heightened the risk that inflation could become entrenched, warranting tighter monetary policy.

Meanwhile, U.S. rate futures are pricing in a 68.6% probability of a 25-basis-point rate hike and a 31.4% probability of no rate change at the October FOMC meeting.

Today, investors will focus on U.S. durable goods orders and core durable goods orders data, set to be released in a couple of hours. Economists expect August durable goods orders to drop -0.3% m/m and core durable goods orders, which exclude transportation, to rise +0.6% m/m, compared with the prior month’s figures of +1.1% m/m and +0.4% m/m, respectively.

The University of Michigan’s U.S. consumer sentiment index will also be released today. Economists project that the final September figure will be revised lower to 47.4 from the preliminary reading of 47.8.

In addition, market participants will be looking ahead to speeches from Kansas City Fed President Jeff Schmid and Cleveland Fed President Beth Hammack.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 5.18%, down -0.56%.

The Euro Stoxx 50 Index is up +1.00% this morning as sentiment improved after oil prices snapped a two-day rally. Technology, mining, and bank stocks climbed on Friday. The benchmark index was on track for a weekly gain. A survey released on Friday showed that German consumer sentiment deteriorated to its lowest level since May heading into October, as higher energy prices weighed on households’ income expectations. “The majority of households expect high energy prices to reduce their purchasing power. As a result, they are more skeptical about their income expectations for the next twelve months,” said Rolf Buerkl, head of the survey at NIM. Separately, data from the European Central Bank showed that lending to Eurozone businesses halved in August from July, indicating that higher borrowing costs following the ECB’s interest-rate hike are curbing investment. Meanwhile, Eurozone government bonds found some relief on Friday after the global rout as the retreat in oil prices tempered inflation concerns. In corporate news, HelloFresh (HFG.D.DX) sank over -10% after the company cut its full-year guidance.

Germany’s GfK Consumer Climate Index and Spain’s GDP data were released today.

The German October GfK Consumer Climate Index came in at -30.6, weaker than expectations of -27.1.

The Spanish GDP rose +0.7% q/q and +2.6% y/y in the second quarter, compared with expectations of +0.7% q/q and +2.7% y/y.

Japan’s Nikkei 225 Stock Index (NIK) closed up +1.30%, while mainland China’s financial markets were closed for a holiday.

Japan’s Nikkei 225 Stock Index ended higher today, supported by gains in bank and chip-related shares. Bank stocks led the advance on Friday as investors bought shares ahead of Monday’s deadline to qualify for mid-term dividends. Chip-related stocks also climbed, extending yesterday’s gains as domestic names continued to catch up with a global AI-driven rally that unfolded while local markets were closed for the Silver Week holidays. Chip gear maker Tokyo Electron rose over +4%, while chip-testing equipment maker Advantest gained more than +2%, providing a significant boost to the Nikkei. In addition, sentiment was buoyed by a retreat in oil prices and global bond yields. The benchmark index posted strong gains for the holiday-shortened week. Meanwhile, the yen strengthened against the dollar on Friday after Finance Minister Satsuki Katayama said U.S. President Donald Trump voiced concerns about the yen’s weakness during a recent meeting with Japanese Prime Minister Sanae Takaichi. On the economic front, the Bank of Japan’s measure of underlying inflation picked up to +2.6% y/y in August from +2.3% y/y in July, bolstering the case for further rate hikes as policymakers warn of the risk of an inflation overshoot. In corporate news, tech investor SoftBank Group fell over -3% as Oracle shares slid in U.S. trading after the company reportedly issued a force majeure notice to the developer of its data center project in New Mexico. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -27.78% at 20.30.

China’s Shanghai Composite Index was closed today for the Mid-Autumn Festival. Mainland China’s financial markets will reopen on Monday.

Pre-Market U.S. Stock Movers

Chip and AI infrastructure stocks advanced in pre-market trading. Arm Holdings (ARM) was up over +4%, while Marvell Technology (MRVL), Sandisk (SNDK), and Advanced Micro Devices (AMD) were each up more than +2%.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - September 25th

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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.