U.S. stock futures were mixed on Tuesday as investors returned from the Labor Day holiday and assessed higher oil prices, rising bond yields, upcoming economic data and expectations for the Federal Reserve’s September policy meeting.
Developments in the Middle East also remained in focus, while markets continued to assess a stronger-than-expected August U.S. employment report.
U.S. Futures Mixed as Markets Reassess Interest-Rate Outlook
Dow Jones Futures fell 0.8% to 53,013 points, while S&P 500 Futures declined 0.3% to 7,691.3 points. Nasdaq 100 Futures were unchanged at 29,593 points.
The moves followed the August employment report, which came in above expectations and prompted investors to reassess the outlook for U.S. interest rates.
Higher oil prices have also added another factor to the inflation outlook as markets consider the potential implications for Federal Reserve policy.
ADP Data and Treasury Auction in Focus
Investors are awaiting the weekly ADP Employment Change report, which uses a four-week moving average of private-sector employment to provide an additional measure of U.S. labour-market conditions.
The U.S. Treasury is also scheduled to auction three-year notes. Demand at the auction will provide an indication of investor appetite for U.S. government debt.
The auction comes after selling pressure in global bond markets pushed government borrowing costs higher. Bond prices and yields move inversely, meaning declining bond prices are accompanied by rising yields.
U.S. national debt has surpassed $40 trillion. The government issues Treasury securities to finance spending and refinance existing obligations, with higher yields increasing its borrowing costs.
Treasury yields also influence borrowing costs elsewhere in the economy, including mortgages and corporate debt, and are one of the factors investors use when valuing equities.
Trump Calls for End to Bombardier U.S. Sales
President Donald Trump on Monday called for an immediate end to Bombardier (TSX:BBD.B) sales in the United States.
Bombardier also trades in the U.S. as BDRAF. According to the supplied material, the U.S. accounts for more than half of the Canadian aircraft manufacturer’s revenue.
The company is expected to generate approximately $10.2 billion in revenue in 2026. Based on the geographic exposure cited in the supplied information, more than half of that amount would represent approximately $5 billion or more in annual U.S.-related revenue.
The supplied information does not identify a specific policy measure implementing Trump’s statement. Any eventual financial effect on Bombardier would depend on whether restrictions are introduced and their scope.
Iran Threatens Maritime Exclusion Zone in Persian Gulf
Geopolitical tensions remained elevated after Iran threatened to respond to what it described as U.S. “economic warfare” by establishing a maritime exclusion zone across the Persian Gulf.
Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, said Iran had issued a warning through its latest missile attacks and that additional economic pressure would be met with an exclusion zone extending across the Gulf towards the perimeter of the U.S. blockade.
Rezaei also said Iran’s approach towards U.S. warships and military bases had been “fundamentally recalibrated.”
Attacks by Iranian-backed Houthi forces on Saudi Arabia have separately increased market attention on energy infrastructure and shipping routes in the region.
The Persian Gulf is an important route for global energy supplies. Disruption to shipping could affect oil availability and prices, although the scale and duration of any impact would depend on developments in the region.
Brent Crude Rises for Third Session and Approaches $100
Brent crude advanced 1.4% on Tuesday to a six-week high, marking a third consecutive session of gains.
The benchmark has recently traded near $99 a barrel as markets assessed U.S.-Iran tensions and the potential for further disruption to regional energy supplies.
A sustained increase in crude prices could contribute to higher transportation and production costs and affect inflation. The eventual implications for monetary policy would depend on the duration of higher energy prices, broader inflation data and the Federal Reserve’s assessment of economic conditions.
Markets are consequently monitoring whether Brent reaches or exceeds $100 a barrel alongside developments in bond markets, U.S. economic data and the Middle East.