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Dow futures slide on oil-driven inflation worries and tariff risks
Traders are pricing in more than a 60% probability of a Fed rate hike in September as markets await this week’s Producer Price Index and Consumer Price Index releases.
US stock futures weakened during European hours on Tuesday, with Dow Jones futures down 0.9% to around 52,950. S&P 500 futures slipped 0.4% to below 7,700, and Nasdaq 100 futures declined 0.2% to under 29,500, as inflation and interest rate concerns reasserted themselves.
Elevated oil prices were cited as a key factor keeping inflation risks and rate worries in focus. Additional upward pressure came after a weekend exchange of strikes between the US and Iran, which raised fears of further price increases.
Trade tensions also added to the caution, with Canada’s retaliatory tariffs, ranging from 15% to 50% on up to $27.6 billion of American goods, scheduled to take official effect on Tuesday. At the same time, traders are increasingly pricing in a greater than 60% probability of a Federal Reserve rate hike in September, a view reinforced by a stronger-than-expected August labor report showing nonfarm payrolls rose by 162,000 and the unemployment rate held steady.
Investors are now watching upcoming Producer Price Index and Consumer Price Index releases later this week for clues on the Fed’s next policy move, with BNY arguing the latest labor data materially strengthened the case for further tightening. The outlook was also framed as being consistent with expectations that a September move remains imminent, despite recent commentary from a Fed governor.
Latest closeS&P 500 7,666.60 ▲0.5%|Nasdaq Comp. 26,217.83 ▲0.5%|Dow Jones 53,061.95 ▲0.6%