Stock Market Today: Treasury bond rout extends Wall Street slump; Powell speech in focus

U.S. equity futures extended declines Thursday amid the most aggressive bond market sell-offs in more than a year as investors recalibrate markets for higher interest rates while adopting a defensive tone alongside the simmering conflict between Israel and Hamas. 

Benchmark 10-year notes yields flirted with the 5% level in overnight trading, which would market a fresh sixteen-year high, following the biggest one-week move in yields in more than eighteen months. 

The paper was last seen changing hands at 4.972% while benchmark 2-year note yields leapt to 5.251% as bets on a January rate hike from the Federal Reserve held at around 50%.

Comments from New York Fed President John Williams yesterday, when he told an event at Queens College that the central bank needs to  "keep this restrictive stance of policy in place for some time" in order to tame renewed inflation risks added to the upward moves and put more emphasis on today's speech from Chairman Jerome Powell later in the session.

In the middle east, Israel upped the pace of airstrikes on targets in Gaza, following the surprise attack from Hamas on October 7, but indicated it could allow limited aid from Egypt once the estimated 200 Israeli hostages held in Gaza are released.

Investors will also pick through details of two major earnings releases, which arrived after the close of trading yesterday, in the form of weaker-than-expected profit margins from Tesla  (TSLA) - Get Free Report and blowout subscriber numbers from Netflix  (NFLX) - Get Free Report.

The tech sector may get a boost, however, from a solid third quarter update out of Taiwan Semiconductor, the word's biggest contract chipmaker, which posted a 25% fall in overall profits but said its starting to see stabilization in the smartphone market and noted AI demand will be a long-term earnings driver.

In other markets, oil reversed much of yesterday's surge, with reports suggesting little support for Iran's move to embargo crude sales to Israel, and the U.S. easing sanctions on Venezuela, putting downward pressure on prices.

Brent crude contracts for December delivery were marked $1.36 lower in overnight trading and changing hands at $90.10 per barrel while WTI futures contracts for November fell $1.16 to $87.16 per barrel.

On Wall Street, futures contracts tied to the S&P 500, which is now up only 0.62% for the month, are priced for a 13 point opening bell decline while those linked to the Dow Jones Industrial Average are indicating a 102 point pullback. 

The Nasdaq is called 25 points lower, with some support coming from the 13.4% surge in Netflix and modest gains for chip stocks.

In overseas markets, the Europe-wide Stoxx 600 was marked 0.9% lower in early Thursday trading, with the MSCI World index down 0.25%, as markets adjusted to the higher rate signals from the U.S. Treasury bond market.

The pan-Asia, the MSCI ex-Japan index slumped 1.56% into the close of trading, while the Nikkei 225 in Tokyo ended the day 1.9% lower as last night's sell-off on Wall Street engulfed regional stocks. 

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