US stock futures rise after previous session’s selloff

On Friday, US stock index futures recovered after significant drops the day before, although analysts anticipated a weaker end to the week due to rising government bond yields and geopolitical tensions. The S&P 500 and tech-focused Nasdaq were expected to end a three-week winning streak, while the Dow Jones was projected to post its steepest weekly decline since mid-March.

The surge in long-term US Treasury yields unsettled markets this week, as worries over mounting federal debt, higher borrowing costs, and lingering inflation concerns dampened investor confidence. The 30-year Treasury bond yield reached its highest level since 2007, with US Treasury Secretary Scott Bessent hinting that the government may boost its Treasury repurchases following a surprise intervention on Wednesday.

While the Treasury will finance buybacks by issuing additional debt, it neither cancels the debt nor alters the deficit trajectory, according to Elwin de Groot, Rabobank's head of macro strategy. Early on Friday, major companies such as Meta and Tesla experienced gains of around 1% each following Thursday's sell-off. Dow E-minis climbed 195 points (0.37%), S&P 500 E-minis increased 25.5 points (0.33%), and Nasdaq 100 E-minis surged 175.5 points (0.60%).

Companies like Ross Stores, which raised its annual profit forecasts and reported a better-than-expected second-quarter performance, saw significant gains of 8.1%. Crypto-linked firms continued to rise, with Bitcoin reaching its highest level since late May after US President Donald Trump urged Congress to pass a key cryptocurrency bill.

Coinbase Global and bitcoin-holding companies like Strategy also demonstrated gains of 5.4% and 9.6%, respectively, while Robinhood recorded a 4.8% increase. However, broader risk sentiment remained subdued as Bessent announced the US would impose the harshest sanctions on Iran ever, which analysts believe may reduce the need for further military actions.

The impasse between Washington and Tehran has contributed to higher oil prices, though they dipped slightly by the end of Friday. UBS Global Wealth Management raised its year-end target for the S&P 500 to 8,100, noting improved earnings outlook and robust corporate profit growth. A preliminary estimate of S&P Global's purchasing managers' index survey for August will be released after market open.

Investors will closely monitor next week's Personal Consumption Expenditures, the Federal Reserve's preferred inflation gauge, and Chair Kevin Warsh's speech at the Jackson Hole symposium for insights into the Fed's rate-cut path. Nvidia, a key player in the AI sector, is expected to announce quarterly earnings next week, providing further insight into the AI trade following strong results from AI infrastructure and major cloud computing companies.