US stock futures fell on Tuesday as Wall Street opened September under pressure from rising oil prices, elevated Treasury yields and renewed Middle East tensions.
Dow futures were down about 315 points or 0.59%, S&P 500 futures slipped roughly 0.56% and Nasdaq 100 futures lost around 0.97% in the latest indications.
Brent crude climbed back above $91 a barrel, while the 10-year Treasury yield reached about 4.79%, raising fresh concerns over inflation and borrowing costs.
September’s poor historical record is adding to the caution, but jobs data beginning with JOLTS later Tuesday could prove more important than seasonality for the market’s next move.
5 things to know before Wall Street opens
1. Bond yields are again squeezing valuations
The US 10-year Treasury yield climbed towards 4.79%, close to its highest level in almost two years, as investors continued to price a higher-for-longer rate environment.
William Blair macro analyst Richard de Chazal wrote in the firm’s latest Economics Weekly that the path of least resistance for yields still appears to be higher.
He argued that Treasury efforts to temper long-term rates have also drawn attention to the fiscal and inflation forces pushing them up in the first place.
That is particularly uncomfortable for highly valued technology stocks, whose future earnings become less attractive as risk-free yields rise.
2. Oil is feeding the inflation problem again
Brent crude climbed roughly 1.8% towards $92 a barrel and WTI moved above $87 as renewed US-Iran hostilities raised fears of prolonged disruption around the Strait of Hormuz.
XTB research director Kathleen Brooks said in a Tuesday market note that renewed military tension, alongside higher oil prices and bond yields, creates an especially difficult backdrop at the start of an already seasonally vulnerable month.
Exxon Mobil and Devon Energy rose more than 1% pre-market as the energy sector benefited from higher crude.
3. September seasonality adds another layer of caution
September has historically been the weakest month for US equities, although the exact average depends on the period measured.
Ameriprise chief market strategist Anthony Saglimbene wrote on Monday that seasonal weakness alone is not a reason to abandon equities.
He sees the underlying economic and corporate backdrop as still supportive and argues that investors are generally better served staying invested rather than trying to trade around the calendar.
That distinction matters after the S&P 500 delivered its strongest August in five years.
4. JOLTS starts a crucial jobs-data run
July’s Job Openings and Labor Turnover Survey is due at 10 am ET. Job openings stood at 7.36 million in June, while hires were unchanged at 5.3 million.
The report comes ahead of ADP private payrolls and Friday’s nonfarm-payrolls release.
With markets increasingly pricing a September Fed increase, weaker labour data could pull yields lower. A strong jobs reading may instead reinforce the view that the Fed has room to stay focused on inflation.
5. Robinhood and Hut 8 buck the weak tape
Robinhood rose after Morgan Stanley upgraded the stock to Overweight from Equalweight and lifted its price target to $150 from $124.
The bank sees the company’s expanding product range improving activity and revenue generated from its existing customer base.
Hut 8 also gained after Anthropic agreed to a $35 billion cloud-computing deal with Nvidia-backed Lambda. Hut 8 is developing the Texas data centre involved in the project.
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