Stock markets displayed choppy trading patterns on Thursday, while bond yields appeared to stabilize near multi-year peaks. The Japanese yen surged against the US dollar as traders weighed factors that could potentially strengthen the currency further, though they remained vigilant about possible renewed intervention by Japanese authorities. Investors are now awaiting upcoming US economic data releases and speeches from several central bank officials, events that could reinforce market expectations for a Federal Reserve interest rate hike this month.
As of the latest update, Dow futures gained 0.20%, S&P 500 futures rose 0.07%, while Nasdaq futures declined 0.15%. Europe's Stoxx 600 index inched up approximately 0.1%, snapping a three-day losing streak. French semiconductor materials company Soitec surged 14% after raising its revenue guidance, and Publicis Groupe advanced following its win of PepsiCo's global media account valued at $1.7 billion.
Where to Begin
In US markets, technology shares remained the focal point. Chipmaker Broadcom saw its pre-market stock price decline after reporting results that failed to meet elevated market expectations. Hewlett Packard Enterprise also moved lower following sales figures that missed lofty projections. Market participants described the current environment as exceptionally challenging to navigate. Since the start of September, global bond yields have climbed sharply as escalating conflict in Iran pushed oil prices higher, reigniting inflation concerns and strengthening bets on a Fed rate increase this month. With corporate earnings season largely concluded, investor attention is shifting toward Friday's US jobs report for additional clues on the economic and policy outlook. Nadege Dufosse, head of multi-asset at Candriam, remarked: "The market currently lacks a clear structural direction and typically follows short-term oil price fluctuations. Trading conditions right now are indeed very difficult."
Yen Surge and Intervention Watch
The yen's rapid appreciation has become a key market theme. Japanese government bond yields pulled back from historic highs, tracking the rebound in global bond markets. Meanwhile, the yen strengthened sharply, heading toward its largest two-day gain since authorities intervened in the foreign exchange market early last month. The currency rose as much as 1.5% to 156.30 per dollar. Traders are reconsidering whether the Bank of Japan might actually be moving too slowly on rate hikes, while news related to Japan's largest pension fund has sparked discussions about increased capital flows into Japanese assets. Furthermore, speculation persists regarding potential fresh intervention by the Japanese government. Recent data from Japan's Ministry of Finance showed intervention operations totaling 15.4 trillion yen between July 30 and August 26. Reports indicate that BOJ officials lean toward raising the benchmark interest rate by 25 basis points this month, while downplaying the likelihood of a single outsized hike but maintaining flexibility on the pace of future increases. Following this news, the yen's gains briefly narrowed. Chris Turner, head of FX strategy at ING, commented: "A sustainable decline in USD/JPY may now require a notably more hawkish BOJ alongside new measures to encourage greater domestic investment in Japanese assets." Andrew Sheets of Morgan Stanley noted that investors remain skeptical about whether US Treasury actions can fundamentally alter the current market landscape.
Bond Markets Catch Their Breath
Elsewhere, Brent crude resumed its advance, gaining approximately 0.7% to $96.30 per barrel. US President Donald Trump had predicted a relatively brief military campaign against Iran, but Tehran has vowed further retaliation, providing renewed support for oil prices. Persistent elevated oil prices continue to pressure bond markets, though sovereign bond yields generally retreated. Over the past week, yields on government debt in several countries climbed to multi-year highs amid concerns over tighter monetary policy and deteriorating fiscal conditions. The US 10-year Treasury yield held roughly steady, remaining near three-year highs. European bonds firmed slightly, with Germany's 10-year yield dipping 1 basis point to 3.37%. Japan's 30-year yield fell 8 basis points to 4.085%, retreating from near-record levels following decent demand at a bond auction for that maturity.
Focus Turns to Jobs Report
The dollar index, which measures the greenback against six major currencies, fell 0.34% to 99.25, dragged down primarily by the yen's sharp advance. The yen has gained nearly 2% over the past two sessions, on track for its biggest two-day jump since the historic joint US-Japan intervention in early August. The euro added 0.16% to approximately $1.1606, sterling rose 0.1% to $1.349, and the Swiss franc strengthened to around 0.8093 per dollar, pushing USD/CHF down 0.44%. Investors are now laser-focused on Friday's crucial US nonfarm payrolls report, following disappointing private sector employment data for August. Fed Governor Christopher Waller is also scheduled to speak that day. New York Fed President John Williams said Wednesday that rising long-term bond yields reflect a still-solid economy and that he continues to gather information to determine his next monetary policy move. Samy Chaar, chief economist at Lombard Odier, observed: "The market has been debating whether higher bond yields are good or bad news. I sense the market emphasizes the negative drivers—excessive debt supply, fiscal risks, geopolitical factors, and oil-driven normalization of risk premia. However, it's also possible that a key reason yields are elevated is simply stronger nominal economic growth." He added: "If demand remains robust and it's that demand keeping yields high, this could actually be a favorable environment for multi-asset portfolios, offering both profit growth exposure through equities and coupon income through credit." Money markets currently price approximately a 60% probability of a Fed rate hike this month, up from below 40% a week ago.
Gold Climbs Back Above 4400
Meanwhile, European natural gas futures rose for a fourth consecutive session, heading toward their highest closing levels since early 2023. US retail diesel prices climbed to their highest since mid-2022, surpassing the peaks seen during the early phase of the Iran conflict and approaching record highs. Wednesday saw the national average retail diesel price rise to $5.783 per gallon. Base metals also advanced, with London copper prices trading within $300 per tonne of their January record high. Gold gained 1% to approximately $4,427, then extended gains to $4,436.34, up 1.14%. The precious metal has rallied nearly 13% from a seven-month low struck in June. Geopolitical uncertainty and concerns over the dollar's purchasing power have attracted renewed capital inflows into gold. The Dutch central bank said Wednesday it had relocated most of its gold reserves from North America to London vaults over the past six months to better prepare for potential crises.
Bank of America: CPI Remains Key for September Hike Decision
Amid recent bond market turbulence, investors are awaiting two crucial US data releases that could influence Fed decisions: Friday's August nonfarm payrolls report and the August Consumer Price Index (CPI) due September 11. However, according to Bank of America, these two indicators carry different weight in the Fed's September 15-16 meeting. The bank views the jobs report more as an "appetizer," with CPI serving as the "main course" that will truly determine whether the Fed hikes rates. BofA analysts stated Wednesday: "Nonfarm payrolls are unlikely to be the decisive factor for a September hike. A significantly weak report could lower the odds, but CPI remains the key data point determining whether the Fed delivers. We maintain our call for a September hike." The bank emphasized that inflation remains the Fed's primary concern.
Schroders Bets on Long-End Treasury Rebound
Asset management giant Schroders has recently increased its positioning in long-dated US Treasuries, believing yields are approaching a cyclical peak after the latest selloff. Johanna Kyrklund, Schroders' global chief investment officer, said regarding the 10-year note: "From a valuation perspective, current levels have become more attractive. Given the recent rise in yields, we think it's appropriate to add some duration now." This call comes as government bond yields across major markets have spiked to multi-year highs. Kyrklund noted: "We judge current levels to be roughly at the top of this yield range. The 4.80% to 5% zone offers buying value for us, and we anticipate a tradable bounce, with yields potentially falling back toward 4.5%."
Barclays Advises Reducing Risk Exposure
Emmanuel Cau, head of European equity strategy at Barclays, stated that September's seasonal factors, the approaching midterm elections, interest rate volatility, and upcoming AI-related IPOs are strengthening the case for equity investors to selectively reduce risk exposure. Rising bond yields represent a major concern for equity investors. Growing worries that higher oil prices will boost inflation have pushed the 10-year Treasury yield to 4.8%, approaching the 5% level typically viewed as negative for stocks. Speculation that the Fed will be forced to hike rates has also intensified, further pressuring bond yields. Cau emphasized: "If the bond market fails to achieve some degree of stabilization, it's hard to see equities moving higher. I believe there's now a reason to selectively reduce beta exposure."
Extreme Caution Among Fast Money Could Set Up Upside Surprise
Investors have adopted defensive postures amid market uncertainty. Yet when caution becomes consensus, a contrarian dynamic can emerge: the market's true "pain trade" may actually be to the upside. While overall positioning remains net long, directional risk exposure among fast-money traders sits at its lowest since April 2025's "Liberation Day." Goldman Sachs prime brokerage data shows net leverage for US long/short equity funds fell to 47.6% last week, with the long/short ratio slightly below 1.6—both metrics at one-year lows. Bobby Molavi, head of Goldman's European, Middle East, and Africa execution services, noted current positioning is "much cleaner than before," suggesting some froth has been removed and retail chasing appears to have diminished. The next two weeks represent a critical window, with the probability of a Fed rate hike at the September 15-16 meeting now approaching 70%. US jobs and inflation data could reinforce existing narratives or completely reverse market sentiment. However, given the light current positioning, fund managers may be forced to chase gains if markets rally.
Individual Stock Highlights
Snowflake shares surged 24% after reporting earnings that beat analyst expectations. The company posted adjusted earnings per share of $0.62 on revenue of $1.55 billion, surpassing LSEG consensus estimates of $0.45 per share and $1.48 billion in revenue. Snowflake also raised its full-year product revenue guidance. The strong results lifted other software names, with Datadog gaining over 5%, ServiceNow up 3%, and Salesforce adding more than 1.5%.
Hewlett Packard Enterprise fell 3%. For the fiscal year ending October 2027, HPE projects earnings growth of 16%-20%, compared with the FactSet consensus of 18.7%. The company expects at least $5 billion in cash flow for that fiscal year, versus market expectations of $4.79 billion.
Broadcom declined 2.5% on negative reaction to its fourth-quarter guidance. The company forecast fiscal Q4 revenue of $34.8 billion, below analyst estimates of $35.03 billion, and guided non-GAAP operating margin of 66% for the quarter, lower than the 66.5% expected. Broadcom reported fiscal Q3 revenue of $29.59 billion and adjusted EPS of $3.32.
Campbell Soup shares tumbled nearly 7% after issuing fiscal 2027 earnings guidance that missed expectations. The company projects EPS of $1.65-$1.80 for fiscal 2027, compared with the FactSet consensus of $1.83, and anticipates a larger revenue contraction than analysts had predicted.
Ultragenyx Pharmaceutical plunged over 46% after its Phase 3 clinical trial for a drug treating Angelman syndrome—a rare genetic neurodevelopmental disorder—failed to meet its primary endpoint. The company expressed disappointment with the results and said it would evaluate the drug program while implementing significant cost reductions.
Petco shares surged nearly 9% after reporting second-quarter adjusted EBITDA margin of 8.2%, above the StreetAccount consensus of 7.4%. Excluding certain benefits, the metric was 7.7%, still ahead of analyst estimates.
Moderna fell over 2% after an investment bank downgraded the biotech to "Sell," citing excessive valuation following a sharp share price surge driven by positive results from an experimental melanoma cancer vaccine trial.
Argan shares jumped nearly 7.5% after the engineering and construction firm posted second-quarter revenue and earnings that surpassed expectations. The company reported EPS of $3.76, well above the FactSet consensus of $2.64, on revenue of $384 million versus expectations of $300.5 million.
Five Below rose 4.5% after the discount retailer beat estimates for second-quarter revenue and earnings. The company posted EPS of $1.68 on revenue of $1.26 billion, compared with FactSet expectations of $1.40 per share and $1.22 billion in revenue. Same-store sales also exceeded market forecasts.
Victoria's Secret shares plummeted over 18% after second-quarter revenue slightly missed expectations. FactSet data showed the company's operating profit guidance for the quarter also came in below market estimates, though full-year revenue projections matched expectations. Adjusted earnings for the second quarter exceeded analyst forecasts.
Netskope surged 12% after projecting full-year revenue of $888-$892 million, above the LSEG consensus of $881 million. The cybersecurity firm also guided for a full-year adjusted loss per share of $0.15, better than the expected loss of $0.18 per share.
NetApp fell 8% after reporting first-quarter deferred revenue of $4.85 billion, slightly below the StreetAccount estimate of $4.86 billion. The data infrastructure company posted non-GAAP gross margin of 70.6% for the quarter, exceeding the 69.7% market expectation.
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