Dow Jones futures rise due to easing Fed rate hike expectations

• US futures indices appreciate as weakening labor market expectations boost Fed pause chances.
• Tech stock momentum pushed major Wall Street benchmarks higher overnight, with the Nasdaq setting a new record high.
• Surging 24-year high Treasury yields and sticky inflation data continue to cap broader market optimism.

Dow Jones futures gain by 0.47% to trade near 51,800 during European hours on Tuesday. S&P 500 futures advance by 0.24% to trade around 7,840, while Nasdaq 100 futures rise by 0.27% to trade near 31,400.

US stock futures rise as traders digest a wave of softer US employment data, which has significantly dampened expectations for a Federal Reserve (Fed) interest rate hike in October. A drop in crude oil prices, driven by indications of expanding supply from the Middle East, has further relieved inflation concerns and eased pressure on monetary policy tightening. Reflecting this shifting sentiment, the CME FedWatch Tool shows that traders are currently pricing in more than a 78% probability that the Fed will keep interest rates on hold at its upcoming meeting.

This positive momentum builds on a robust start to the week for Wall Street, where a strong rally in technology equities pushed major indices higher. During Monday's regular US trading session, the Nasdaq Composite advanced 1.05% to reach a new record peak, while the S&P 500 and the Dow Jones Industrial Average gained 0.66% and 0.18%, respectively.

Megacap tech leaders like Nvidia, Tesla, and Microsoft spearheaded the market's upward drive. SpaceX also surged over 7% following reports that the firm proposed constructing a natural gas pipeline in Florida to power its Starship launch operations at Cape Canaveral.

However, broader market sentiment remains tempered by developments in the fixed-income market, where US Treasury yields have surged to fresh 24-year highs. This persistent yield spike reflects a widespread global bond selloff triggered by widening fiscal deficits and sticky inflation. Reinforcing these cost pressures, recent ISM survey data showed that input prices within the US services sector recently escalated at their sharpest rate in over four years.

Nasdaq hits fresh record as equities extend gains

Analysts at Danske Bank note that “equities moved higher on Monday and finished not far from session highs,” with the rally led by US benchmarks. They highlight that “the Nasdaq even reached a fresh record, while the S&P 500 is just 0.3% below its own,” underscoring the strength of the move despite the index still trading shy of its all‑time peak.