Dow Futures Slip as Rate-Hike Bets, Oil Prices Weigh

U.S. stock futures were mixed in overnight trading Monday as investors came back from the Labor Day holiday to face fresh worries about inflation, elevated crude prices, and the possibility that the Federal Reserve could raise interest rates next week.

Dow Jones futures dropped 0.6% to 53,116.0 points as of 21:07 ET (01:07 GMT). S&P 500 futures edged down 0.1% to 7,712.25 points, while Nasdaq 100 futures gained 0.3% to 29,639.75 points.

These moves followed a closure of U.S. markets on Monday for Labor Day, giving investors time to absorb an August jobs report that beat expectations and rising geopolitical tensions in the Middle East.

Investors have substantially raised their expectations for a September rate hike after data revealed that U.S. employers added 162,000 jobs in August, far exceeding analyst forecasts, while the unemployment rate stayed at 4.1%.

Futures markets were indicating about a 60% chance of a 25-basis-point rate increase at the Federal Reserve's September 15-16 meeting, climbing from 49% prior to the report, according to CME FedWatch.

UBS on Monday became one of the latest large banks to adjust its outlook, projecting two Fed rate increases this year—one in September and one in December. Previously, UBS had expected no policy moves in 2026.

Market focus now shifts to a set of inflation readings set for release later this week: producer prices on Thursday and consumer prices on Friday. These figures could play a key role in deciding whether the Fed proceeds with a rate hike or leaves policy steady.

Oil prices compounded the inflation worries, with Brent crude hovering near $97 per barrel on Tuesday amid an escalating U.S.-Iran conflict and increasing concerns about potential supply disruptions in the Strait of Hormuz.

Iran has warned of retaliation against energy infrastructure in the region after U.S. strikes on Iranian ships, while unconfirmed reports of attacks on Saudi Arabia's Jazan refinery further fueled fears of additional supply interruptions.

Rising energy costs could muddy the Fed's policy path by intensifying inflationary pressures at a time when officials are evaluating whether the economy is resilient enough to endure more restrictive monetary policy.

Wall Street had already closed lower on Friday in the wake of the jobs report: the Dow Jones Industrial Average dropped 0.5%, the S&P 500 slipped 0.4%, and the NASDAQ Composite retreated 0.3%.