U.S. stock index futures edged higher on Friday.

Rising Treasury yields rattled financial markets as Wall Street prepared to close out a week of volatile trading.

As of press time, Dow futures were up 0.41%, S&P 500 futures were up 0.40%, and Nasdaq futures were up 0.73%.

Market sentiment also received a boost from oil prices. Optimism that the Strait of Hormuz could reopen pushed crude prices lower. Iranian Foreign Minister Abbas Araghchi said that if the U.S. accepts Iran's conditions, Iran is willing to pursue diplomatic mediation and restart nuclear talks with the U.S. within seven days. Media reported on Thursday that U.S. and Iranian negotiators in New York were considering a phased agreement to calm the Middle East conflict. U.S. WTI crude futures fell 2% to around $92 per barrel, while international benchmark Brent crude dropped 1% to around $104 per barrel.

As of Thursday's close, the Dow Jones Industrial Average had fallen 0.6% for the week and was on track for a fourth consecutive weekly decline. The S&P 500 was up 0.7% so far this week, while the Nasdaq had gained 1.6% for the week.

The bond market remained turbulent. On Thursday, the 10-year Treasury yield climbed to a recent high, and the 30-year Treasury yield hit its highest level since 2004; the latest quotes edged slightly higher at 5.183% and 5.478%, respectively. Comments from Federal Reserve Governor Michael Barr, persistently elevated energy prices driven by the Iran conflict, and an improving PMI report all contributed to this week's rise in Treasury yields. According to the CME FedWatch tool, federal funds futures trading data showed about a 66% probability of a Fed rate hike in October. The mortgage reference rate tied to the 10-year Treasury rose to 7.45%, the highest since 2024. Ahead of the midterm elections, household borrowing costs may rise further. Morgan Stanley economist Heather Berger wrote in a research note to clients: "Even before the market moves of recent days, the downward trend in annualized credit card rates and auto loan rates from mid-2024 to early 2026 had already stalled, and mortgage rates have resumed accelerating upward." She added: "We expect these pressures to weigh on consumption primarily through the goods side, which will cause us to forecast a 40 basis point slowdown in real consumption growth next year."

Goldman Sachs Asset Management is underweight large cloud service providers and expects a continued wave of debt issuance. Goldman Sachs Asset Management believes that with a large influx of new debt into the market, the firm is currently underweight the companies with the largest AI-related borrowing and expects hyperscale cloud service providers to issue even more debt. Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, said in a media interview on Thursday: "We think hyperscale cloud service providers will issue a lot of bonds. We are overall underweight this sector because we know there will be more supply." Rosner said: "This has been the case throughout the year, with new issuance replacing existing bonds."

Wall Street faces a new interest rate landscape, where a 5% Treasury yield may become the norm or even a floor. As U.S. Treasury yields break through one high after another, Wall Street and Washington are increasingly realizing a reality: this may not just be a bond market selloff, but a fundamental shift. Multiple factors have pushed up the U.S. government's borrowing costs, including $100-per-barrel oil, the AI investment boom, and a massive U.S. budget deficit that has driven debt to a record $40 trillion. At the same time, the Fed remains determined to push inflation down from years of above-target levels. Now, nearly all benchmark Treasury yields in the U.S. are hovering around 5% or higher, with the five-year Treasury yield breaking above 5% on Wednesday for the first time since 2007.

Among individual stocks, cloud computing company Akamai (NASDAQ: AKAM) surged more than 21% on Thursday after announcing a seven-year computing supply agreement with Anthropic. Akamai also granted Anthropic a warrant allowing it to acquire up to about 5% of the company at an exercise price of $111.33 per share.

Children's book publisher Scholastic (NASDAQ: SCHL) reported a loss in the first quarter of its fiscal year, sending its shares down more than 10%. Scholastic disclosed an adjusted loss of $3.63 per share, compared with a loss of $2.52 per share a year earlier. Revenue was $216.8 million, down 4% year over year.

HSBC upgraded Synopsys (NASDAQ: SNPS) from Hold to Buy, and the company's shares rose more than 3% in premarket trading. HSBC analyst Frank Lee noted that Synopsys' new business model will make it a "high-growth AI beneficiary."

Bank of America downgraded sportswear company Nike (NYSE: NKE) from Neutral to Underperform, expecting sales to decline from the second quarter through the end of fiscal 2027, sending Nike shares down nearly 2%.

Although Costco (NASDAQ: COST) reported fourth-quarter results that beat market expectations, its shares edged lower. Costco reported adjusted earnings per share of $6.60 and revenue of $95.72 billion; analysts surveyed by Refinitiv had expected earnings per share of $6.53 and revenue of $94.86 billion.