U.S. stock futures moved lower on Thursday as investors assessed higher global bond yields, stronger business activity data and an increase in oil prices ahead of a meeting between U.S. President Donald Trump and Chinese President Xi Jinping.
At 02:55 ET, Dow futures were down 155 points, or 0.3%, while S&P 500 futures declined 37 points, or 0.5%. Nasdaq 100 futures fell 211 points, or 0.7%.
The main U.S. equity indices had also declined during the previous session as Treasury yields increased following stronger-than-expected U.S. business activity data. The U.S. composite PMI rose to 58.4 in September, its highest level since July 2021.
Oil prices were also back above $100 a barrel as investors monitored developments surrounding the conflict with Iran and the outlook for energy supplies.
Trump-Xi Meeting Puts Trade and AI in Focus
Trump and Xi are scheduled to meet in Washington on Thursday, with trade, artificial intelligence and other areas of the U.S.-China relationship expected to feature in the discussions.
The two countries have been operating under a trade truce following previous rounds of tariff increases. Investors are monitoring whether the arrangements will be extended and whether the meeting produces further agreements on trade.
Artificial intelligence is another area under discussion. U.S. Treasury Secretary Scott Bessent said after talks with Chinese Vice Premier He Lifeng that the U.S. had proposed an AI safety notification mechanism for consideration by Trump and Xi.
The proposal would form part of a potential U.S.-China AI dialogue and would cover incidents considered significant to national security. China’s response to the proposal had not been made clear.
Bond Yields Rise Following U.S. Business Activity Data
Global bond markets remained in focus after U.S. Treasury yields increased following preliminary business activity figures from S&P Global.
The U.S. composite PMI reached a more than five-year high in September, while Treasury yields moved to multi-year highs as markets increased expectations for further Federal Reserve interest rate increases.
Deutsche Bank analysts said “this was part of a global theme,” pointing to stronger business activity readings outside the United States as well.
“So if anything, the initial signal from the PMIs suggested that growth was accelerating in September across many of the world’s biggest economies,” the analysts said.
Market pricing for additional Federal Reserve tightening has increased following the data, although those expectations remain subject to subsequent economic figures and future central bank decisions. Reuters reported that federal funds futures were pricing a 66% probability of an October increase following Wednesday’s market moves.
Brent Crude Returns Above $100
Brent crude rose more than 3% in the session described in the supplied material, ending a five-session run of declines and moving back above $100 a barrel.
Oil markets continued to monitor U.S.-Iran diplomatic developments and the outlook for shipping through the Strait of Hormuz.
Earlier declines in crude had also coincided with reports of increased availability through Saudi Arabia’s East-West Pipeline.
“Collectively, that strong data and the oil rebound led to growing speculation about faster rate hikes,” according to the Deutsche Bank analysts.
Costco Results Due
Costco (NASDAQ:COST) is among the companies scheduled to report fiscal fourth-quarter results.
In its previous quarter, the retailer reported sales above projections, with demand for lower-priced gasoline among the factors cited in the supplied material.
The company’s earlier results also indicated that consumers remained selective about larger purchases amid elevated inflation, while Costco’s efforts to limit increases in some food prices affected third-quarter margins.
Costco shares were up more than 5% for the year at the time covered by the source.