U.S. stock futures rise as investors wait to hear from Fed’s Powell

What’s driving markets

Lingering fears that the Hamas-Israel war may escalate, alongside a spike in benchmark bond yields, caused stocks to struggle for direction early Thursday.

“The market selloff gathered pace over the last 24 hours, as rising geopolitical risks and a fresh surge in long-term borrowing costs added to the downbeat mood,” said Jim Reid, strategist at Deutsche Bank.

The yield on the 10-year U.S. Treasury
BX:TMUBMUSD10Y
moved to within a few basis points of 5%, its highest level since the summer of 2007, as investors expressed concerns that the Federal Reserve will need to keep interest rates higher for longer given the resilience of the U.S. economy and inflation that is still nearly double the central bank’s 2% target.

Traders thus will be eager to hear whether Federal Reserve Chair Jay Powell addresses the latest sharp rise in yields when he delivers comments at the Economic Club of New York, starting at noon.

“Investors are desperate for a bit more clarity on how policy makers view the landscape ahead and want clues on how long they’ve had to wait before cuts are on the cards,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“He’s expected to stay in a watchful mood, stressing continued vigilance and not becoming complacent when it comes to inflation,” Streeter added.

Other Fed officials making comments on Thursday include Chicago Fed President Austan Goolsbee speaking in Madison, Wisconsin at 1:20 p.m., and Fed Vice Chair for Supervision Michael Barr speaking at a Boston Fed conference at 1:30 p.m.

Labor-market data released Thursday came in stronger than expected, as the number of Americans who applied for unemployment benefits last week fell to a nine-month low of 198,000, defying expectations that layoffs would rise as higher U.S. interest impact the economy. Existing home sales and leading economic indicators, both covering September, will be released at 10 a.m.

Meanwhile, the third quarter corporate earnings reporting season moves on, with results from AT&T
T,
-1.78%
and Blackstone
BX,
-2.88%,
which surpassed expectation. Reports from Western Alliance Bancorp
WAL,
-1.31%,
CSX
CSX,
-2.23%
and Intuitive Surgical
ISRG,
+0.05%
are set to follow after the bell.

In terms of the wider market the results late Wednesday from Netflix
NFLX,
-2.68%
and Tesla
TSLA,
-4.78%
have pretty much canceled each other out, with shares in the streaming giant jumping more than 12% on well-received numbers but the electric vehicle maker losing nearly 5% following cautious comments from Elon Musk.

Companies in focus

• Equifax Inc. shares
  EFX,
  -3.15%
  sank nearly 7% after the credit-score agency cut its outlook for the year, over concerns that high mortgage rates are causing mortgage credit inquiries to track at a 37% decline for the year.

• American Airlines Group Inc.
  AAL,
  -4.86%
  bounced sharply off a three-year low into positive territory early Thursday, even after the air carrier reported third-quarter revenue that came up a bit short and provided a downbeat profit outlook.