Hawkish Fed Signals Rate Hikes Ahead, US Stock Futures Plummet

US stock futures kicked off September on a sour note as traders grew increasingly anxious about impending interest-rate hikes. The Nasdaq-100 plummeted roughly 1% in early trading, while S&P 500 and Dow Jones Industrial Average futures each slipped around 0.5%. Market jitters were fueled by surging bond yields, with the US 10-year Treasury yield soaring to approximately 4.79%, its highest level since January 2025.

The catalyst for this yield spike can be attributed to Federal Reserve Chair Kevin Warsh's recent speech at Jackson Hole, which took a decidedly hawkish tone. Markets responded by pricing in a significant probability of a rate hike at the September FOMC meeting, with expectations now centered on a 65% to 67.5% chance.

Brent crude oil prices also surged, reaching $92 per barrel as military tensions between the US and Iran escalated, putting a strain on global supply chains. Energy stocks managed to buck the trend, benefiting from these same supply fears that were punishing other sectors.