Nasdaq 100: Futures Lead the Stock Market Rebound as Bond Yields Stay High

• The 10-year Treasury yield hit 5.23% and the 30-year reached 5.50%, pushing the 30-year fixed mortgage rate to 7.45% (highest since 2024), while Fed funds futures show 68% odds of another rate hike in October
• Market concentration has reached unprecedented levels: the top 8 S&P 500 stocks have a beta of 1.23 versus 0.87 for the other 492 stocks, with 45% of constituents showing negative three-month correlation to the index
• The Nasdaq-100 is up 1.6% for the week while the Dow heads for its fourth consecutive weekly loss, as UBS warns markets are increasingly dependent on AI capital spending following Oracle's force majeure report on a New Mexico data center project

Market Summary: Stock Futures Rebound Amid Elevated Treasury Yields

Key Market Movements

Stock index futures showed modest recovery Friday, with December E-mini S&P 500 futures up 0.26% to 7,787.50 and December E-mini Nasdaq-100 futures gaining 0.52% to 30,925.25. However, the Dow Jones is heading for its fourth consecutive losing week, while the Nasdaq-100 is up 1.6% for the week.

Bond Market Pressure

The 10-year Treasury yield reached 5.23% Thursday—the highest level since 2007—while the 30-year yield hit 5.50%. Fed funds futures indicate a 68% probability of another rate hike in October. The 30-year fixed mortgage rate climbed to 7.45%, its highest since 2024, raising concerns about consumer spending.

Market Concentration Concerns

A record 45% of S&P 500 constituents now display negative three-month beta to the index, more than double the level during the 2000 dot-com collapse. The top eight stocks carry a beta of 1.23, while the remaining 492 average 0.87, highlighting extreme market concentration.

Contributing Factors

Hawkish comments from Federal Reserve Governor Michael Barr, elevated energy prices linked to Iran conflict, and strong PMI reports from S&P Global drove yields higher throughout the week. Morgan Stanley expects higher borrowing costs to weigh on consumption growth.

AI Spending Risk

UBS warned that markets increasingly rely on AI capital spending to support growth. Oracle's force majeure report on its New Mexico data-center project raised concerns about potential spending slowdowns.

Friday's durable-goods orders and University of Michigan consumer sentiment reports could further influence rate hike expectations and market direction.