US Stock Futures Mixed as Fed Rate Hike Bets Rise

U.S. stock futures traded mixed Tuesday as Wall Street returned from the Labor Day holiday, with investors weighing stronger employment data, rising oil prices and growing expectations that the Federal Reserve could raise interest rates in September.

Dow Jones futures fell 0.6% to 53,116 points, while S&P 500 futures edged 0.1% lower to 7,712.25. Nasdaq 100 futures bucked the trend, gaining 0.3% to 29,639.75.

Market sentiment remained cautious after the August U.S. jobs report showed employers added 162,000 positions, significantly exceeding economists' forecasts. The unemployment rate held steady at 4.1%, reinforcing expectations that the economy may be strong enough to withstand tighter monetary policy.

Traders are now pricing in roughly a 60% chance of a 25-basis-point Fed rate hike at the September 15-16 meeting, according to CME FedWatch. That compares with about 49% before the employment data was released.

UBS also revised its Federal Reserve outlook, forecasting two interest rate increases in 2026. The bank now expects hikes in September and December after previously predicting rates would remain unchanged throughout the year.

Investors will closely monitor U.S. inflation data later this week for further clues about the Fed's next move. Producer price figures are scheduled for Thursday, followed by the consumer price index on Friday.

Meanwhile, surging oil prices are adding to inflation concerns. Brent crude traded near $97 per barrel as escalating U.S.-Iran tensions raised fears of disruptions to Middle East energy supplies, particularly through the Strait of Hormuz. Iran has threatened retaliation against regional energy infrastructure following U.S. strikes on Iranian vessels, while reports of attacks on Saudi Arabia's Jazan refinery have heightened supply concerns.

Persistently high energy prices could further complicate the Federal Reserve's inflation outlook and strengthen the case for tighter monetary policy.

Wall Street entered the holiday weekend on a weaker footing. On Friday, the Dow Jones Industrial Average dropped 0.5%, the S&P 500 declined 0.4%, and the Nasdaq Composite fell 0.3% following the stronger-than-expected jobs report.