Wall Street Futures Stabilize Amid Oil Price Halt and Rate Hike Bets

Wall Street futures stabilized on Wednesday as oil prices and Treasury yields took a breather from their surge. The benchmark S&P 500 rose 0.5% to 7,669.53 points, while the tech-heavy index moved into positive territory, gaining 0.4% to 26,208.17 points.

The relentless sell-off in sovereign debt has pushed benchmark borrowing costs to multi-year and multi-decade highs. In the U.S., the 10-year Treasury yield hovered near 4.354%, its highest level since 2025, while the 30-year bond advanced to 4.780% and the 60-year bond reached 5.273%. The sharp surge in risk-free rates directly squeezes equity markets through multiple channels.

Market sentiment was further weighed down by a second round of U.S. military strikes against targets linked to Iran's Islamic Revolutionary Guard Corps (IRGC) in the Persian Gulf, prompting retaliatory Iranian missile strikes against U.S. military bases. The ongoing energy shock has reignited fears of cost-push inflation passing into consumer prices.

The persistence of energy-driven inflation fears and hawkish commentary from central bank officials have led money markets to aggressively price in further monetary tightening. According to the CME FedWatch tool, traders now price in a 67.9% probability of a 25-basis-point rate hike at the Fed's Sept. 16 policy meeting.