U.S. stock futures were indicating higher Thursday open on Wall Street, after the S&P 500 wiped out an almost 2% decline during trading Wednesday to close 2 points higher. The Dow Jones Industrial Average clawed back a 2.3%, plunge, nearly 600 points, to finish just 22 points lower. Concerns about the U.S.-China trade war causing a global economic slowdown has slammed stocks this week. Ahead of Thursday trading, the Dow was down 1.8% for the week, while the S&P 500 was down 1.6% this week.
The stock market bounced as plummeting bond yields stabilized. The 10-year Treasury yield, which briefly dipped below 1.6% on Wednesday, moved above 1.7%, where it remained Thursday morning. Investors have been rushing into bonds as a safety trade, pushing yields down in recent days and prices higher. Bond yields and bond prices move in opposite directions. On Wednesday, Chicago Federal Reserve President Charles Evans suggested he would be open to lowering interest rates again to counter the risks to economic growth.
Investors, tracking the Chinese currency carefully after it fell to financial crisis lows Monday, saw the central bank in China set the official reference rate for the yuan at 7.0039 per dollar, the lowest level since April 2008. A weakening Chinese currency, represented by more yuan needed to buy a dollar, makes China exports more attractive. President Donald Trump has frequently complained that a strong dollar against the yuan gives Beijing a trade advantage.
China on Thursday reported that dollar-denominated July exports rose 3.3% from a year ago while imports fell 5.6%. From January to July, China's trade surplus with the U.S. has totaled $168.5 billion. The Trump administration has repeatedly used the U.S. trade deficit with China as a reason for putting 25% tariffs on $200 billion of Chinese goods, with plans to put new levies on the rest of China's imports starting Sept. 1.
Caterpillar shares were downgraded by Goldman Sachs on Thursday, with the brokerage saying it could no longer justify its buy rating on the stock due to headwinds in the China and North America construction equipment markets hit by the trade war. Goldman downgraded Caterpillar to neutral, and cut its price target to $130 a share from $156 per share. Caterpillar was down just over 1% to about $120 per share in premarket trading.
— AP and Reuters contributed to this report.