U.S. stock index futures indicated a challenging day for Wall Street on Friday. Investors are grappling with rising bond yields and ongoing geopolitical tensions. Furthermore, they are digesting remarks made by Federal Reserve Chairman Jerome Powell on Thursday.

Here’s what’s happening:

On Thursday, the major stock indices performed as follows:

Key market drivers:

The major stock indices are on track for weekly losses due to the 10-year Treasury yield nearing the 5% mark on Thursday. The 10-year Treasury yield (BX:TMUBMUSD10Y) was down 4 basis points at 4.944% on Friday, but it has surged by 31 basis points throughout the week, starting from 4.616% on Monday.

Federal Reserve Chairman Jerome Powell, speaking in New York on Thursday, provided a cautious economic outlook but didn’t rule out the possibility of further interest rate hikes. He also mentioned that higher Treasury yields could assist the Fed in combating inflation by tightening financial conditions.

The recent surge in bond yields might be attributed to robust retail sales data, following strong nonfarm payroll data and higher-than-expected inflation figures earlier in the month. These factors have fueled expectations of a more hawkish stance from the Fed.

Cleveland Fed President Loretta Mester is the last scheduled speaker before the blackout period leading up to the November 1 rate decision.

In terms of corporate earnings, American Express (AXP, -1.26%) is set to report ahead of the market open. Next week, major tech companies like Alphabet (GOOGL, -0.15%), Microsoft (MSFT, +0.37%), and Amazon.com (AMZN, +0.21%) will release their earnings.

Geopolitical tensions stemming from the conflict between Israel and Hamas have also had an impact on investor sentiment. Oil prices rose again on Friday, with concerns about a potential ground invasion by the Israeli military. This situation has led to heavy strikes in Gaza and evacuations in affected areas.

Commodity prices are also in focus, with West Texas Intermediate crude (CL.1, 0.95%) rising 1% to $89.39 a barrel, and gold (GC00, 0.28%) climbing $12.80 to $1,993.30 an ounce.

Companies in the spotlight:

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