TLDR
- Dow, S&P 500, and Nasdaq futures all fell Thursday morning as bond yields climbed to multi-decade highs.
- The 10-year Treasury yield hit its highest level since 2007, and the 30-year yield reached its highest since 2004.
- Traders now see a 71% chance the Federal Reserve raises rates next month, up from 55% a day earlier.
- President Trump and Chinese leader Xi Jinping began their Washington summit, with a trade truce extended to January 10.
- Darden Restaurants shares dropped after weak earnings, while Costco was set to report results after the closing bell.
US stock futures dropped on Thursday morning as investors weighed rising bond yields against hopes for progress on trade and Middle East diplomacy. The pullback followed a down day on Wall Street and signaled a cautious start to trading.
Futures on the Dow Jones Industrial Average fell 0.3% to 0.5% depending on the reading, while S&P 500 futures declined between 0.6% and 0.7%. Nasdaq 100 futures dropped over 1%, pointing to weakness in technology shares.
Bond Yields Reach Multi-Decade Highs
The sell-off in bonds was the main driver behind the market’s mood. The yield on the 10-year Treasury note rose to 5.14%, its highest level since July 2007.
The 30-year Treasury yield climbed as high as 5.44%, a level not seen since 2004. Rising yields tend to make borrowing more expensive for companies and consumers alike.
BREAKING: The US 30Y Note Yield rises to 5.44%, its highest level since June 2004.
We are nearing a +500 basis point gain from the 2020 low.
Where is the US Treasury? pic.twitter.com/nnoApVuyHS
— The Kobeissi Letter (@KobeissiLetter) September 24, 2026
The jump followed a batch of economic data showing stronger than expected business growth. That data raised concerns about inflation staying elevated for longer.
Stronger growth numbers also gave the Federal Reserve more room to consider raising interest rates. According to the CME FedWatch tool, traders now price in a 71% chance of a rate hike next month.
That figure jumped sharply from just 55% the day before. The shift shows how quickly expectations can change based on new economic reports.
Some investors remain calm despite the yield spike. Glen Smith, chief investment officer at GDS Wealth Management, pointed out that markets have weathered similar yield levels before.
He noted that stocks managed to handle yields near 5% back in 2023. Smith suggested the current earnings trend may be strong enough to offset worries about rates.
Trump and Xi Meet in Washington
Away from the bond market, President Trump’s meeting with Chinese leader Xi Jinping was the other major event investors watched closely. Treasury Secretary Scott Bessent said the US and China agreed to extend their trade truce for two more months.
The new deadline for the truce is January 10. Remaining discussion points include artificial intelligence competition, the war in Iran, and critical minerals.
Several top US technology executives were set to join the two leaders for dinner on Thursday. The gathering added a business dimension to the high level diplomatic meeting.
In corporate news, Meta introduced cameraless VR glasses at its Connect event on Wednesday evening. The company also shared plans to start monetizing its Muse AI agent, which has become a top app in app stores.
Darden Restaurants shares fell after the company’s first quarter results came in below expectations. Costco Wholesale Corporation was scheduled to report its own earnings after the market closed Thursday.
Investors were also watching for fresh economic data. Initial jobless claims figures and new home sales numbers were due out during the day, both of which could further influence rate expectations.
As of the latest premarket reading, the E-Mini Dow sat at $51,692, down 0.35%. The E-Mini S&P 500 traded at $7,725, down 0.61%, while the E-Mini Nasdaq 100 fell to $30,434.75, a drop of 1.07%.
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