Dow Jones futures climb as Fed rate hike expectations ease

Dow Jones futures climbed 0.47% to trade near 51,800 during European hours on Tuesday, while S&P 500 and Nasdaq 100 futures also saw gains of 0.24% and 0.27%, respectively. This upward momentum comes as traders react to softer US employment data, which has significantly reduced expectations of a Federal Reserve rate hike in October. The CME FedWatch Tool now shows a 78% probability that the Fed will maintain current interest rates at its next meeting.

The market’s positive sentiment was further supported by a decline in crude oil prices, driven by reports of increased supply from the Middle East. This development has eased inflation concerns and reduced pressure for further monetary tightening. The rally builds on a strong start to the week for Wall Street, with the Nasdaq Composite reaching a new record high, up 1.05% on Monday.

Megacap tech leaders such as Nvidia, Tesla, and Microsoft led the market’s upward push. SpaceX also saw a surge of over 7% following news that the company proposed constructing a natural gas pipeline in Florida to power its Starship launch operations. However, broader market sentiment remains cautious due to rising US Treasury yields, which have hit 24-year highs amid a global bond selloff and persistent inflation pressures.

Analysts at Danske Bank noted that equities moved higher on Monday, with the Nasdaq reaching a fresh record and the S&P 500 trading just 0.3% below its all-time peak. They highlighted the strength of the move despite the index not yet achieving its highest level.