Wall St futures rise as yields, oil dip
US stock index futures rose on Tuesday as Treasury yields dipped from multi-year highs and oil prices retreated, offering investors some relief ahead of the quarterly earnings season.
The tech-heavy Nasdaq closed at a record high on Monday, lifted by heavyweights Nvidia and Microsoft, as investors continued to bet on the AI boom that has pushed stock markets to record highs.
Nvidia rose 0.7% in premarket trading and was last valued at $5.8 trillion.
The benchmark S&P 500 closed just 0.6% below its mid-August peak on Monday, and a record high for the index would imply the bull market that began in October 2022 remains intact.
Optimism around the AI trade and expectations of strong corporate earnings have helped US stocks outperform global peers over the past six months despite higher energy prices and a volatile summer for bond markets that fueled concerns about tighter monetary policy.
The yield on 30-year Treasury bonds fell to 5.626%, having touched a 2002 high of 5.702% a day earlier.
A softer-than-expected payrolls report last week eased expectations around rate hikes this year. Traders now see a 78% chance of the Federal Reserve holding interest rates steady this month, though a December rate hike remains largely priced in, according to the CME Group’s FedWatch tool.
Oil prices fell more than 1% on Tuesday, with Brent crude trading at $98.58 as resilient Middle Eastern crude exports and a G7 emergency stockpile release eased supply concerns. [O/R]
‘Magnificent Seven’ stocks edged higher, with Meta, Tesla and Amazon.com climbing around 0.6% each, while chip stocks such as Intel and Micron Technology were marginally lower.
At 5:50 a.m. ET, Dow E-minis were up 281 points, or 0.55%, and S&P 500 E-minis were up 19.5 points, or 0.25%. Nasdaq 100 E-minis were up 102 points, or 0.33%.
The third-quarter earnings season kicks off next week with reports from large US banks.
Analysts on average see S&P 500 earnings jumping over 30% year over year in the quarter, thanks largely to AI-related stocks, according to LSEG data.
Among individual movers, Option Care Health jumped 21.4% after healthcare group McKesson and private equity firm Clayton Dubilier & Rice were reportedly closing in on a deal to buy the infusion services provider for nearly $5 billion.
Mattel shares fell marginally after a major shareholder urged the Barbie maker to explore a sale, saying progress in its performance and profitability had stalled, according to a letter seen by Reuters.
A stream of investor cash flowing into money-market funds has slowed significantly this year, pushing up yields on Treasury bills and potentially leaving markets vulnerable to short-term funding issues.
Money fund inflows have totaled just $158 billion in the first three quarters this year, TD Securities data show, down from $823 billion for the full year of 2025 and $840 billion in 2024.
Reduced money-fund inflows have hit demand for T-bills, analysts said, lifting their yields in recent sessions relative to comparable overnight index swaps (OIS), a key money market benchmark that reflects Federal Reserve rate-increase expectations embedded in swap markets.
“If money funds are not getting those inflows, then they have to think about where they want to put their money,” said Sam Earl, US rates strategist at Barclays.
Money market funds, however, remain net buyers of Treasury bills, though demand has slowed markedly. By the end of August, those holdings had increased roughly 4% from year-end 2025, according to the latest Investment Company Institute data, versus an 18% rise over all of 2025.
SIGNS OF INVESTOR CONCERN
That softer pace of demand is beginning to show up in the relative pricing of Treasury bills, with investors requiring a larger premium to hold them.
US 3-month bill yields rose nearly 10 basis points above 3-month OIS on Monday, after hitting last week the widest spread since September 2024. For six-month maturities, that spread was at 11.3 basis points on Monday, touching 12.5 last week, the highest since April 2025.
The spread measures the bill’s valuation relative to the market’s implied path for short-term Fed policy. If T-bills are yielding more, it suggests investors are demanding extra compensation to hold US short-term debt, typically valued for liquidity and near risk-free status.
Nafis Smith, principal and head of taxable money markets at Vanguard, said the strength of the US equity market this year has helped crimp money fund flows by reducing the investor impulse to put money into cash. The S&P 500 is up 13% this year and the Nasdaq is up 18%.
