US Stock Futures Edge Higher; Polymarket Sees 65% Probability of S&P 500 Opening Higher on August 21

US stock index futures edged higher in early trading Friday as investors weighed rising geopolitical risks against contained domestic inflation and resilient financial conditions.

Polymarket participants hold a bullish stance on the August 21 trading session. The "S&P 500 Up or Down on August 21?" contract currently reflects a 65% probability of an opening rise.

Why This Number Matters

Traders are balancing favorable domestic conditions against a serious escalation in the Middle East:

Positive Index Futures: Stock index futures point to a slightly positive open. S&P 500 futures are up 0.08%, Nasdaq 100 futures are up 0.20%. Dow Jones futures are also up 0.05%, and Russell 2000 futures are up 0.33%.

Geopolitics and Energy: US Treasury Secretary Scott Bessent warned that the US will impose "the most severe sanctions" on Iran in response to the ongoing conflict. This follows President Donald Trump's earlier threats of "economic warfare" and "massive" consequences for any nation aiding Tehran. Despite these historic threats, oil prices have pulled back slightly; Brent crude futures are trading at $93.24 per barrel, while US West Texas Intermediate crude fell to $86.18 per barrel.

Economic Data and Earnings: Investors are awaiting the August flash US Manufacturing PMI and flash US Services PMI data, due at 9:45 AM ET. Friday's earnings calendar is light but includes reports from KE Holdings Inc. ADR, BJ's Wholesale Club Holdings Inc., and Buckle Inc.

The Bullish Case and Market Outlook

Despite ongoing geopolitical noise and elevated Treasury yields, underlying macroeconomic forces continue to support risk appetite. According to LPL Financial Chief Economist Jeffrey Roach, three key developments are stabilizing markets. First, continued strong demand from Japan for US Treasuries helps support global capital markets.

Second, US financial conditions remain relatively accommodative, with stress levels lower than in most major developed and emerging markets. Third, inflation conditions have improved markedly since peaking in May, keeping expectations anchored.

Roach believes the foundation of the current expansion remains intact, meaning there is no need to adopt a defensive stance now. Instead, investors appear focused on a global macro backdrop that is more constructive than expected, allowing markets to absorb external shocks with limited disruption.

How the Previous Prediction Played Out

The August 20 Polymarket contract settled as "Down." The contract recorded $60,481 in total trading volume.

On Thursday, the SPDR S&P 500 ETF Trust and Invesco QQQ Trust ETF, which track the S&P 500 and Nasdaq 100, respectively, closed lower. SPY fell 0.84% to $762.60, and QQQ fell 0.72% to $710.93. Meanwhile, the State Street SPDR Dow Jones Industrial Average ETF Trust, a Dow-tracking fund, also fell 1.27% to $527.51.