By Avinash P and Purvi Agarwal
Aug 21 (Reuters) – U.S. stock index futures regained ground on Friday after sharp declines in the previous session, though markets were on track to end the week lower due to surging government bond yields and geopolitical uncertainty.
The S&P 500 and the tech-heavy Nasdaq were set to snap a three-week winning streak, while the Dow was headed for its steepest weekly fall since mid-March.
A jump in long-dated U.S. Treasury yields spooked markets this week as concerns over ballooning government debt, higher financing costs and persistent inflation fears dented sentiment. The yield on the 30-year Treasury bond hit its highest level since 2007 earlier this week.
U.S. Treasury Secretary Scott Bessent said on Thursday that the government could further increase its Treasury repurchases after Wednesday’s surprise intervention.
Yields, however, remained near recent highs.
“The Treasury must finance buybacks by issuing other debt. It can… temporarily reduce the duration dealers and investors must absorb, but it neither cancels debt nor changes the deficit path,” said Elwin de Groot, head of macro strategy at Rabobank.
“That explains why Thursday’s long-bond rally should not be extrapolated – and why part of it has already faded.”
Early on Friday, most megacaps were treading higher in premarket trading. Meta and Tesla led gains with about a 1% rise each after Thursday’s selloff.
At 07:08 a.m. ET, Dow E-minis rose 195 points, or 0.37%, S&P 500 E-minis added 25.5 points, or 0.33%, and Nasdaq 100 E-minis gained 175.5 points, or 0.60%.
In early movers, Ross Stores was up 8.1% after the value retailer raised its annual profit forecasts and reported better-than-expected second-quarter results.
Crypto-linked companies continued to rise, with bitcoin touching its highest mark since late May after U.S. President Donald Trump called on Congress to pass a crucial crypto bill.
Exchange operator Coinbase Global added 5.4%, bitcoin-hoarder Strategy rose 9.6% and retail-investor platform Robinhood advanced 4.8%.
Broader risk sentiment, however, remained in check as Bessent said the United States will impose “the toughest sanctions in history” on Iran, a move he suggested would lessen the need for new major military operations.
The impasse between Washington and Tehran has kept oil prices higher, though they dipped slightly on Friday. [O/R]
UBS Global Wealth Management raised its year-end target for the S&P 500 to 8,100, pointing to a stronger earnings outlook and confidence that corporate profit growth will remain robust into next year.
A flash estimate of S&P Global’s purchasing managers’ index survey for August is scheduled for release after markets open.
EYES ON WARSH, NVIDIA
Attention will now turn to next week’s Personal Consumption Expenditures, the U.S. Federal Reserve’s preferred inflation gauge, following tame inflation readings last week that knocked down bets of an imminent rate hike from the central bank.
Chair Kevin Warsh’s speech at the Jackson Hole symposium will be scrutinized for clues on the Fed’s rate-cut trajectory.
AI bellwether Nvidia is scheduled to report quarterly earnings next week, in the next test of the AI trade following strong earnings from some AI infrastructure companies, along with major hyperscalers.
(Reporting by Avinash P and Purvi Agarwal in Bengaluru; Editing by Pooja Desai)
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