Stock futures climb as 10-year Treasury yield retreats

S&P 500 futures gained 0.3 percent on Tuesday morning, positioning the index to challenge its all-time closing high from mid-August. The advance followed a record-setting session for the Nasdaq Composite on Monday, with retreating Treasury yields providing a supportive backdrop for risk assets.

Dow Jones Industrial Average futures advanced approximately 215 points, or 0.4 percent, while Nasdaq-100 futures climbed 0.4 percent. The S&P 500 had closed Monday just below its previous peak. In the bond market, the 10-year Treasury yield slipped roughly three basis points to about 5.27 percent, moving away from Monday's peak, which was its highest level since April 2002. The 30-year yield hovered near 5.636 percent. Over the past several weeks, both yields and equities have advanced in tandem, an unusual correlation for the current environment.

Oil prices also contributed to the positive market tone. Brent crude fell roughly two percent to trade below $100 a barrel, while West Texas Intermediate futures dropped around 2.3 percent to settle at $87.47. The Wall Street Journal reported that traders are weighing a rise in ship traffic through the Strait of Hormuz against Iranian efforts to block that flow by attacking tankers.

Premarket activity indicated that major technology stocks were on track to extend Monday's gains. Shares of Nvidia, Meta Platforms, and Amazon moved higher in early trading, suggesting tech names would continue to drive the Nasdaq's momentum.

Lisa Shalett, investment chief at Morgan Stanley Wealth Management, noted in a client letter that bond markets have remained turbulent for six consecutive weeks. She attributed this volatility to a potentially new Federal Reserve policy framework, economic growth, and elevated oil prices amid the ongoing Middle East conflict. Shalett observed that while intraday implied volatility has increased, the recent stretch has not reached the extremes that catalyzed the equity bear market in 2022.

Investors are now focused on Wednesday's release of the Federal Reserve's September meeting minutes. Market participants expect the record to provide clarity on the reasoning behind the committee's rate decision. In Asian markets, Tokyo's Nikkei 225 finished up 0.29 percent and Sydney's S&P/ASX 200 ended 0.53 percent higher. Hong Kong's Hang Seng index gained 0.95 percent, while Seoul's Kospi edged down 0.23 percent. Chinese mainland exchanges remained closed for the Golden Week holiday.