Fed minutes, Walmart earnings and $40 trillion U.S. debt in focus for markets: Dow Jones, S&P, Nasdaq, Wall Street Futures

U.S. stock futures edged higher on Thursday after a Treasury intervention helped stabilise government bond markets and supported Wall Street in the previous session. Investors were also assessing more hawkish Federal Reserve minutes, awaiting earnings from Walmart (NYSE:WMT) and monitoring renewed U.S. pressure on Iran as the country’s national debt crossed $40 trillion for the first time.

U.S. futures move modestly higher

At 02:39 ET (06:39 GMT), Dow futures were up 45 points, or 0.1%, while S&P 500 futures gained 13 points, or 0.2%. Nasdaq 100 futures outperformed with an advance of 145 points, equivalent to 0.5%.

Wall Street’s major indices finished higher on Wednesday, helped partly by a rebound in government bonds after the U.S. Treasury stepped in to address a sharp sell-off in long-dated debt.

The rout had pushed the 30-year Treasury yield to its highest level in almost two decades. Shortly before equity trading began, the Treasury announced that it would double the size of its buybacks for longer-term government debt.

Bond yields subsequently retreated globally, weighing on the dollar and providing support for gold. Earlier in the week, rising government borrowing costs had pressured equities as investors worried about soaring artificial intelligence investment, widening fiscal deficits and elevated oil prices.

Despite the support from lower Treasury yields, Capital Economics analysts said “U.S. equities are largely indifferent to bonds.”

“[T]he big picture is that Treasuries have played second fiddle to AI in influencing the S&P 500 in recent years. And that’s likely to remain the case for a while,” they argued in a note.

Fed minutes reveal greater support for higher rates

Minutes from the Federal Reserve’s July meeting showed a more hawkish policy debate than markets had anticipated, with additional officials expressing support for tighter monetary policy.

The Fed left interest rates unchanged at the meeting, although three of the 12 voting members of the Federal Open Market Committee favoured a quarter-percentage-point increase.

Among all 19 FOMC participants, including seven officials without voting rights, “many” believed further tightening would probably be appropriate if inflation failed to decline.

Fed Chair Kevin Warsh has previously emphasised the importance of bringing inflation under control, although his suggestion that rising market interest rates since June had already tightened financial conditions without an official rate increase created uncertainty among investors.

Some policymakers were also concerned that markets had begun pricing in an interest-rate increase that the Fed had not committed to, while questioning whether financial conditions were restrictive enough to return inflation sustainably to the central bank’s 2% target.

Capital Economics analysts said the minutes confirmed that the Fed had become “more hawkish” since June, “but, with the inflation, labor market and activity data since then all on the soft side, there is little to suggest that interest rate hikes are imminent.”

Walmart earnings put U.S. consumer health in focus

Walmart (NYSE:WMT) is among the most closely watched companies reporting quarterly results on Thursday, with investors looking for further evidence on the health of American household spending.

Attention will also be directed towards Walmart Connect, the retailer’s advertising operation, which is increasingly important as the company attempts to offset pressure from heavier discounting and softer consumer activity.

Higher gasoline prices and broader economic uncertainty have encouraged households to search for lower-priced products, weighing on Walmart’s same-store sales growth.

Walmart Connect has provided a brighter spot. The advertising division grew 44% during the quarter ended April 30, its fastest expansion on record, as brands increasingly used Walmart’s customer data to target shoppers and convert advertising into purchases.

Walmart shares have risen just over 1% this year, significantly underperforming the S&P 500.

Trump threatens countries doing business with Iran

U.S. President Donald Trump has warned of “TREMENDOUS Economic Consequences” for countries continuing to conduct business with Iran, although he did not provide details about the measures Washington could impose.

“I am announcing the MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY! This will be Economic Warfare and Isolation on an unprecedented scale,” Trump said in a social media post.

Trump added that Iran was “hanging by a thread” following months of U.S. operations and urged American allies to participate in the campaign.

Both U.S. and Iranian officials have said this week that negotiations are not currently taking place, prolonging uncertainty surrounding the Strait of Hormuz. Shipping data indicates that tanker traffic through the strategically important waterway has slowed dramatically.

Concerns about prolonged supply constraints have pushed Brent crude more than 5% higher this week, adding to worries that energy costs could generate another wave of inflation. Brent was up another 0.5% at $92.05 a barrel on Thursday.

U.S. national debt passes $40 trillion

Fiscal concerns also returned to the spotlight after U.S. gross national debt exceeded $40 trillion for the first time.

The Treasury Department said total public debt outstanding reached $40.047 trillion on Tuesday, with the debt burden having roughly doubled during the presidencies of Trump and former President Joe Biden.

The milestone comes as spending on entitlement programmes and interest payments continues to increase, while government revenues have been affected by successive tax cuts.

“While White House officials pay lip service to addressing fiscal imbalances, their actions suggest a complete disregard for any type of soberness on this issue, and the other side of the aisle isn’t any better — no one in Washington seems keen on taking action,” analysts at Vital Knowledge said in a note.

“The steps announced recently by Treasury to mitigate the recent advance in rates (including helping Japan with yen interventions and the expanded buybacks) are relatively minor compared to the issuance problem, as both sovereigns and corporates (due in large part to AI) hit the market with a tidal wave of debt.”

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