Wall Street returned from its Labor Day break in a cautious mood, with stock futures pointing lower on Tuesday as rising oil prices and looming inflation data gave investors reasons to stay defensive.
Futures on the Dow Jones Industrial Average slipped about 0.9 percent, while S&P 500 futures fell roughly 0.4 percent and Nasdaq-100 contracts hovered near flat. The moves followed a Friday session in which stocks closed mostly lower after a much stronger than expected jobs report gave the Federal Reserve more room to consider raising, rather than cutting, interest rates: nonfarm payrolls rose by 162,000 in August, well above forecasts of roughly 50,000, which pushed bond yields higher and weighed on rate-sensitive stocks.
Adding to the caution, oil prices extended their recent climb as tensions around the Strait of Hormuz continued, a dynamic that tends to filter through to inflation expectations because energy costs feed directly into prices for everything from gasoline to shipping. The S&P 500 slipped modestly to around 7,707 in recent trading, still up about 18 percent from a year earlier despite the pullback, with declines led by Apple, Alphabet, and Microsoft, while industrial names like Caterpillar and Honeywell, along with Home Depot, bucked the trend with gains.
Investors are now looking ahead to fresh inflation data and to Oracle's earnings report later this week, both of which could help clarify whether the Federal Reserve has room to cut interest rates at its meeting later this month or whether persistent price pressures will keep policymakers on hold.
Oracle reports earnings later this week, and fresh inflation data due out in coming days will be closely parsed for clues on the Fed's next move.
Why did strong jobs data hurt stocks?
A much stronger than expected jobs report reduces the case for the Federal Reserve to cut interest rates soon, which tends to push bond yields up and weigh on stocks.
What is driving oil prices higher?
Ongoing tensions around the Strait of Hormuz, a critical global shipping route for crude oil, have pushed prices up in recent sessions.