S&P 500 and Nasdaq 100 futures edged higher Monday while Dow futures slipped, as traders weighed a surprise July jobs contraction against Iran's new conditions for reopening the Strait of Hormuz and Berkshire Hathaway's latest results. Markets are now looking to Wednesday's U.S. inflation report for the next signal on Federal Reserve policy.
S&P 500 futures gained 8 points, or 0.1%, while Nasdaq 100 futures climbed 86 points, or 0.3%, as Dow futures slipped 25 points, or 0.1%, by 03:05 ET Monday, with traders weighing Middle East tensions against this week's inflation data.
Wall Street's major indices had advanced Friday after data showed the U.S. economy unexpectedly lost 23,000 jobs in July, with the prior two months' figures revised substantially lower. Investors read the weaker labor market as reducing the likelihood of a Federal Reserve rate hike next month, and government bond yields fell while the dollar weakened after the report.
Iran sets conditions for reopening the Strait of Hormuz
Geopolitical risk stayed a factor after Iran outlined conditions it says must be met before the Strait of Hormuz can fully reopen. According to Iranian state news agency IRNA, the secretary of Iran's Supreme National Security Council said Washington would need to permanently end the war, remove the naval blockade, eliminate sanctions, release frozen Iranian assets, and pay war reparations, alongside halting threats, insults, and military operations against Tehran's allies.
The strait handles about one-fifth of global oil and liquefied natural gas supplies, so continued restrictions on tanker traffic could weigh on energy markets and the broader global economy. Brent crude futures rose 0.5% to $83.95 a barrel by 03:23 ET against that backdrop.
Berkshire Hathaway becomes a net buyer of stocks
Berkshire Hathaway (NYSE:BRK.B) reduced its record cash pile to $364.7 billion in the second quarter as new chief executive Greg Abel stepped up investment activity, and the conglomerate reported a doubling of net profit. Abel, who succeeded Warren Buffett as CEO at the start of the year, oversaw Berkshire's first stretch as a net buyer of equities in 15 quarters, directing billions into existing holdings including Alphabet.
The company also repurchased $4.53 billion of its own shares during the quarter, a sharp acceleration from the limited buyback activity in the first quarter, when Berkshire resumed repurchases after more than a year without buying back stock.
Inflation data looms as the next catalyst
Investors are now turning to Wednesday's U.S. Consumer Price Index report, which could shape expectations for the Federal Reserve's next policy moves. Headline inflation is forecast to ease to 3.4% year-on-year in July from 3.5% previously. Core CPI, which excludes food and energy, is expected to moderate to 2.5% from 2.6%. Energy prices remain part of the outlook after gasoline costs rose following the start of the Iran conflict in late February.
Vital Knowledge analysts noted that inflation at these levels would stay well above the Federal Reserve's target, leaving policymakers balancing persistent price pressures against signs of a softening labor market.
Source: InvestorsHub
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