US pre-open: Indices to retreat from records as stock futures fall

(Sharecast News) - US stock markets were expected to track European indices lower on Friday, with the S&P 500 and Nasdaq set to pull back from record highs, as Treasury yields hit a one-year high.

With just two hours to go before Wall Street opens, Dow futures were down 0.5%, S&P 500 futures were down 0.8% and Nasdaq futures were down 1.3%.

Chip stocks drove strong gains on Thursday on hopes that the meeting in Beijing between Donald Trump and Xi Jinping might result in some major tech deals between the US and China. However, the lack of any major news prompted semiconductor stocks to slide in pre-market trading, with Nvidia and AMD falling sharply.

Meanwhile, AJ Bell investment director Russ Mould said the lack of developments concerning a possible peace deal between the US and Iran is weighing on investors' minds.

"The situation in the Middle East may have gone relatively quiet but every day that goes by without a resolution to the crisis only cranks up the pressure on the global economy. This is reflected in rising yields on government debt across the globe," he said.

The yield on a 10-year US Treasury note was up 6.1 basis points at 4.55%, hitting levels not seen since May 2025.

Renewed optimism about AI and strong corporate earnings pushed US indices to fresh record highs on Thursday, but "not everything is rosy", according to Matt Britzman, senior equity analyst, Hargreaves Lansdown.

"US 10-year Treasury yields are pushing around one-year highs, while UK gilt yields have eased a touch from earlier in the week but remain at levels that scream discomfort rather than calm. That pressure is feeding directly into rate expectations, with markets weighing up the risk of renewed hikes in the US and nearly three Bank of England hikes by year-end, even if equity markets have chosen not to care too much just yet," he said.

Economic data will be in focus ahead of the opening bell on Friday, with the NY Empire State manufacturing index expected to show a softening of growth in May, while industrial production stats are tipped to show a small increase in April after a weaker March.

In equity news, Applied Materials reported record quarterly revenue and issued a stronger-than-expected outlook overnight, as demand for AI infrastructure and advanced memory chips continued to drive spending on semiconductor manufacturing equipment.

The US chip equipment maker said revenue rose 11% year on year to $7.91bn in the second quarter ended 26 April, ahead of analyst expectations of about $7.67bn to $7.69bn cited by Bloomberg.