Looking to the Futures

Technology stocks led U.S. markets higher on Thursday as easing Treasury yields and shifting expectations surrounding Federal Reserve policy fueled the broader rebound. September Nasdaq-100 futures (/NQU26) rose roughly 1.2% on Thursday, settling at 29,524.75 and closing near the intraday high of 29,584.25. The Nasdaq Composite Index finished 1.4% higher on the session, outperforming the broader market as investors made their way back to technology and other rate-sensitive areas of the market. 

Treasury yields have been the story of the past couple weeks and remained one of the primary drivers of Thursday's move. After their recent climb amid renewed inflation concerns and uncertainty surrounding Fed policy, bond yields retreated sharply following comments from Federal Reserve Governor Christoper Waller Thursday morning. The 10-year yield finished the day near 4.77%, while the two-year fell to roughly 4.34%. This decline provided some relief for growth stocks that have faced some pressure from the recent rise in borrowing costs. 

In Waller's commentary Thursday morning, he most notably stated that he would be inclined to leave interest rates unchanged at the Fed's September meeting if the upcoming inflation data continues to support stabilizing pressures on prices. Despite these more optimistic remarks, he did leave the door open to supporting a hike should inflation show signs of reacceleration. Markets had increased the probability of a September rate hike to nearly 65% as recently as Wednesday, but saw these odds fall to approximately 50% following Waller's remarks. 

Investors also continued to monitor elevated oil prices and ongoing tensions between the U.S. and Iran. Crude prices have kept a persistent pressure on equity markets as concerns remain that higher energy costs could further complicate the Fed's efforts to bring inflation back toward its 2% target. Oil remained volatile Thursday, though the decline in Treasury yields and reduced expectations for an imminent rate hike ultimately outweighed those concerns. Crude oil futures (/CL) gained roughly 0.32% on Thursday before settling at 91.3, well off the intraday high of 93.14. 

Attention now shifts to Friday's August employment report, which could provide the next major test for both Treasury yields and equity markets. Thursday's weekly jobless claims report showed a slight increase to 206,000 but remains near historically low levels. Recent labor data has shown that hiring is slowing considerably compared to previous years. This adds further weight to the importance of Friday's report as investors continue to assess whether the labor market remains strong enough to withstand potentially tighter monetary policy. 

On the daily chart, September Nasdaq-100 futures (/NQU26) rebounded sharply on Thursday but price continues to remain largely sideways over the past several weeks. Despite the advance, /NQ finished just below its 20-day simple moving average, a level that has remained closely intertwined with price throughout the recent consolidation. /NQ did however reclaim the 9- and 50-day SMAs and appeared to use the 100-day as a key support and launchpad for Thursday's rise. Price continues to remain comfortably above the longer-term 200-day SMA. 

The 14-day RSI finished at 51.93, indicating largely neutral momentum despite Thursday's rally. Trading volume increased to 530,329 contracts, slightly exceeding the 50-day average of approximately 527,800. 

According to the Daily Hightower Report, /NQ may find support at 29256.63 and 28,911.19, with potential resistance at the 29,765.87 and 29,929.68 levels. 
 

Employment Report - 8:30 AM ET

Unemployment Rate - 8:30 AM ET

Avg Hourly Earnings, M/M% - 8:30 AM ET

Avg Hourly Earnings, Y/Y% - 8:30 AM ET

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