U.S. equity futures are modestly higher as Microsoft’s strong earnings offset Meta’s weaker guidance and another rise in long-term Treasury yields. Around 6:00 a.m. ET, S&P 500 futures were up 0.2%, Dow futures were up 0.1% and Nasdaq 100 futures were up 0.3%. The Russell 2000 enters the session from a weaker position after falling 1.6% Wednesday, with small caps especially sensitive to the 30-year Treasury yield reaching its highest level since 2007.
U.S. equities sold off Wednesday after the Federal Reserve held rates steady and Chair Kevin Warsh provided little clarity on the future policy path. The S&P 500 fell 1.5%, the Dow declined 2.2%, the Nasdaq lost 1.7% and the Russell 2000 dropped 1.6%. Technology and Industrials led the decline, while higher oil prices and a sharply steeper Treasury curve intensified pressure on valuations.
Market breadth confirmed that Wednesday’s weakness was broad. Decliners led advancers by 2.22:1 on the NYSE and 2.56:1 on the Nasdaq. Exchange-volume totals were not included in the supplied snapshot.
The Treasury curve steepened sharply. The 2-year yield fell 4 basis points to 4.24%, while the 10-year rose 8 basis points to 4.68% and the 30-year surged 12 basis points to 5.21%. The long end extended higher Thursday morning, with the 30-year yield reaching approximately 5.24%, its highest level in 19 years, as investors questioned the Fed’s inflation strategy and absorbed the absence of clear forward guidance.
The DXY fell 0.48 to 100.93 Wednesday. The euro strengthened to $1.1450, sterling rose to $1.3349, and the dollar declined to ¥163.52. The dollar has recovered modestly this morning as markets increased the implied probability of a September rate increase to roughly 65%.
September WTI crude rose 6.75% Wednesday to $84.61, while August gold gained 0.33% to $4,051.90. Oil extended higher early Thursday, with WTI near $84.85 and Brent around $91.80, after renewed U.S. strikes on Iranian targets and continued risks to shipping through the Strait of Hormuz and Bab el-Mandeb. Spot gold was little changed near $4,062, as geopolitical demand was offset by rising yields and expectations for additional Fed tightening.
The Fed maintained its target range at 3.50%–3.75%, but three officials dissented in favor of an increase. Markets initially rallied after the decision before reversing as Warsh’s press conference failed to resolve uncertainty over whether the Fed is prepared to respond to energy-driven inflation.
Thursday’s data calendar is unusually heavy. The advance estimate of second-quarter GDP, June personal income and spending, the PCE price indexes and weekly jobless claims are due at 8:30 a.m. ET. Economists expect annualized GDP growth near 2.1%, supported by consumer spending and AI-related equipment investment. Core PCE inflation is expected to rise about 0.2% month over month and 3.3% year over year, keeping inflation above the Fed’s target despite June’s drop in gasoline prices.
Sector Highlights
At the sector level3, Energy gained 1.98%, followed by Consumer Staples +0.26% and Communication Services +0.20%. The remaining sectors declined, including Real Estate -0.19%, Health Care -0.61%, Materials -1.10%, Consumer Discretionary -1.18% and Utilities -1.35%. The largest losses came from Industrials -3.24%, Technology -2.50% and Financials -1.57%.
Information Technology
- Microsoft (MSFT +8.0% premarket) reported revenue of approximately $90 billion, up 18% from a year earlier, while Azure growth reached 43%. The company projected continued cash-flow growth through fiscal 2027 and kept its capital-spending outlook stable, helping distinguish its results from recent AI reports dominated by higher spending and weaker free cash flow.
- Apple (AAPL) reports after the close. Investors will focus on iPhone demand, services growth, China exposure and how aggressively the company plans to expand AI investment.
Communication Services
- Meta Platforms (META -8.5% premarket) exceeded revenue expectations, but costs rose sharply and free cash flow fell as AI infrastructure, legal expenses and restructuring weighed on profitability. Third-quarter revenue guidance also came in slightly below expectations.
Consumer Discretionary
- Amazon (AMZN) reports after the close. AWS growth, retail margins and the effect of a capital-spending program approaching $200 billion will be the primary focus.
Industrials
- Old Dominion Freight Line (ODFL -1.5%) reported better-than-expected second-quarter earnings with revenue in line. Its operating ratio was better than consensus, management cited improving demand trends and raised full-year capital-spending guidance for real estate, service-center expansion and tractors and trailers.
- ODFL’s shares nevertheless underperformed Wednesday as the broader Industrials sector fell sharply and long-term yields rose.
Real Estate
- CoStar Group (CSGP) remained under pressure despite an adjusted earnings beat. Revenue came in slightly below expectations and management reduced its full-year sales outlook, while investors focused on Residential softness, the Ten-X restructuring and a series of analyst downgrades and price-target reductions.
