Key facts
- U.S. stock index futures opened lower on Tuesday, continuing a downward trend.
- Elevated bond yields and higher oil prices are pressuring markets.
- Federal Reserve Chair Kevin Warsh's hawkish remarks have increased expectations for interest rate hikes.
- The JOLTS report and nonfarm payrolls data are key upcoming economic indicators.
- Energy stocks saw gains as Brent crude prices increased.
U.S. stock index futures slipped on Tuesday, extending a weak run as elevated bond yields and higher oil prices kept investors at bay at the start of a historically weak month for equities. A sharp increase in rate-hike bets has soured sentiment in recent sessions, and renewed clashes in the Middle East have exacerbated worries that borrowing costs may need to rise to contain price pressures. The selloff in U.S. Treasuries also pushed yields to their highest in months, dampening risk appetite further. Higher yields on risk-free Treasuries make it less attractive for investors to take on the added risk of buying equities.
Investors are also contending with seasonal weakness. Since 1926, the benchmark S&P 500 has lost 0.7% on average in September, making it the weakest month for stocks and the only one with a negative average return. However, historical trends may not be a reason to step away from stocks, as the fundamental backdrop for stocks and the economy is considered sound.
At 4:46 a.m. ET, Dow E-minis shed 251 points, or 0.48%, S&P 500 E-minis were down 37 points, or 0.48%, and Nasdaq 100 E-minis fell 244 points, or 0.83%.
The Labor Department's Job Openings and Labor Turnover Survey, also known as the JOLTS report, will be in focus later in the session, ahead of the more crucial nonfarm payrolls data on Friday. The reports are expected to be analyzed for clues on the health of the labor market after Federal Reserve Chair Kevin Warsh said taming inflation is the central bank's chief focus. A payrolls report landing near consensus would reinforce the view that the timing of any future policy shift hinges more on the path of price pressures than on the pace of payroll growth.
Big movers in the premarket session included Robinhood, which rose 2.5% after Morgan Stanley upgraded the stock. Hut 8 added 1.77% after reports that the digital infrastructure firm will develop a data center as part of a cloud deal between Anthropic and Lambda. Energy stocks rose following a 1.86% gain in Brent crude, with Exxon Mobil and Devon Energy up more than 1% each.