Market Watch: Stock Futures Slip as Treasury Yields Weigh on Sentiment – May 23, 2025
Major Indexes Under Pressure as Deficit Concerns Mount
The stock market is facing headwinds on Friday, May 23, 2025, as investors continue to evaluate the impact of rising U.S. Treasury yields on the broader economy. Early morning trading shows futures pointing lower, with Dow Jones Industrial Average futures down 15 points (0.04%), S&P 500 futures trading flat, and Nasdaq 100 futures dipping 0.09%.
The major market indexes are heading for weekly losses after several days of selling pressure. Through Thursday’s close, the S&P 500 is down nearly 2% for the week, while the Dow Jones Industrial Average is on pace for a decline of about 1.9%. The tech-heavy Nasdaq Composite is tracking for a 1.5% slide week to date.
Thursday’s regular trading session saw the S&P 500 and Dow Jones closing just below the flatline, marking their third consecutive losing day. The Nasdaq Composite managed to buck the trend, rising about 0.3%.
Treasury Yields Surge on Deficit Worries
The market’s recent pullback comes as investors grow increasingly concerned about the U.S. government’s ballooning deficit. On Thursday, the House of Representatives narrowly passed President Donald Trump’s sweeping tax bill in a 215-214 vote, sending it to the Senate for review.
According to the nonpartisan Congressional Budget Office, the bill is expected to add approximately $3.8 trillion to the federal government’s $36.2 trillion debt over the next decade.
“Even if the inability to reduce the deficit in the U.S. doesn’t lead to default, a large deficit still implies greater bond supply, and perhaps eventual inflation as the debt is monetized to avoid default,” explained Thierry Wizman, global rates and currencies strategist at Macquarie.
Upcoming Market Events to Watch
As investors navigate these fiscal concerns, attention is turning to several key upcoming market events. Most notably, semiconductor giant Nvidia (NVDA) is scheduled to release its quarterly earnings report next Wednesday, which could significantly impact market sentiment.
“All eyes are going to be on Nvidia’s report,” said Chuck Carlson, CEO of Horizon Investment Services. “The whole AI theme has been a major driver of the market and Nvidia is at the epicenter of that theme.”
Analysts expect Nvidia’s first-quarter earnings to jump about 45% on revenue of $43.2 billion.
Economic Data and Holiday Weekend
On the economic front, investors will be watching for building permits and new home sales data released today.
Market participants are also preparing for a three-day weekend, with U.S. stock markets closed on Monday for Memorial Day.
Looking Ahead: Corporate Earnings and Market Outlook
Friday marks a busy day for corporate earnings, with approximately 60 companies scheduled to report their quarterly results.
As why is the market up today remains a challenging question amid the current volatility, investors should keep an eye on Treasury yields, which continue to represent a significant headwind for equities. Higher yields not only increase borrowing costs for companies and consumers but also make fixed-income assets relatively more attractive compared to stocks.
“The biggest concern from an investment standpoint is that higher rates represent more competition for equities,” noted Horizon’s Carlson. “If rates continue to move higher, that is going to put increasing amounts of pressure on where investors are putting their money.”
As the stock market today navigates these complex dynamics, traders will be closely monitoring developments in Washington regarding fiscal policy and keeping a watchful eye on next week’s key earnings reports and economic data releases.
