U.S. stock-index futures displayed minimal movement on Tuesday evening as traders remained cautious amid renewed geopolitical tension and lingering interest-rate jitters.
By 19:41 ET (23:41 GMT), S&P 500 futures were essentially flat at 7,646.0 points, Nasdaq 100 futures held steady at 29,136.25 points, and Dow Jones futures were unchanged at 52,837.0 points. The calm in futures followed a negative session on the cash market, where major benchmarks fell as much as 1% in a sluggish trading day.
Geopolitical developments and oil
Trading pulled back after Washington carried out additional strikes against Iran’s Islamic Revolutionary Guard Corps, marking the second such U.S. military action against Iran this week. The strikes coincided with continued tensions over the Strait of Hormuz - a vital shipping route for global energy flows. While U.S. authorities said traffic through the waterway remained open, Iran asserted the Strait was closed to commercial shipping. Shipping data noted traffic through Hormuz was still operating at a fraction of pre-conflict levels.
Those developments sent oil prices sharply higher, reinforcing investor concern about energy-driven inflation and its potential effects on the broader economy and monetary policy. President Donald Trump signaled that Washington could hit back harder if Iran retaliates, after earlier threats to target Kharg Island, an Iranian oil export terminal.
Rate outlook and Treasury moves
Wall Street was also pressured by a renewed selloff in Treasuries, which pushed yields to multi-year highs. The rise in yields came alongside growing market expectations for a Federal Reserve rate increase in September. Traders have priced in a markedly higher probability of a 25 basis point rate hike in September, with the CME FedWatch tool showing that odds rose to 67.9% from 34.7% a week earlier.
Commentary from Fed leadership, reiterating a commitment to a 2% inflation target, added to investor caution. The market is focused on upcoming labor-market data as a key determinant of policy decisions. Chief among these is Friday’s nonfarm payrolls report, but this week also featured JOLTS job openings data for August and stronger-than-expected manufacturing purchasing managers index figures for the same month.
Tuesday’s JOLTS release showed job openings slightly weaker than expectations but picking up from the prior month. The data underscored the ongoing scrutiny of labor-market resilience - a resilient jobs backdrop would give the Fed more leeway to raise rates.
Market moves
On the day, the S&P 500 slipped 0.7%, the Nasdaq Composite declined 1.0%, and the Dow Jones Industrial Average lost 0.8%. Stronger manufacturing PMI readings did little to stem the selling pressure on equities.
Overall, the combination of heightened geopolitical risk, higher energy prices and rising Treasury yields left investors largely on the sidelines as they awaited further economic data that could clarify the Fed’s path.
Bottom line
Futures remained muted after a downbeat cash session, with market participants balancing renewed conflict in the Middle East and a higher likelihood of Fed tightening as the week’s economic calendar culminates with key labor-market reports.