U.S. stock futures barely moved as traders weighed fresh American strikes on Iran, a jump in global bond yields, and a stack of economic data due out this week. The Strait of Hormuz remains a flashpoint, while the 10-year Treasury yield closes in on 5%.
U.S. stock index futures held steady on Tuesday evening as investors balanced the outlook for interest rates against the risk of further U.S.-Iran strikes. S&P 500 Futures were flat at 7,637.5 points by 03:20 ET. Nasdaq 100 Futures were unchanged at 29,112 points, while Dow Jones Futures rose 0.17% at 52,914 points.
Iran strikes keep the Strait of Hormuz in focus
The caution follows a weak Wall Street session, where major indexes fell as much as 1% in a sluggish start to September. Markets remained on edge after the U.S. carried out another round of strikes against Iran's Islamic Revolutionary Guard Corps, marking Washington's second attack on Iran this week.
The two countries remain at odds over the Strait of Hormuz, with the U.S. saying the waterway stays open to commercial shipping while Iran says it remains closed. Shipping data showed traffic through the strait was still running at only a fraction of pre-war levels. President Donald Trump also warned that the U.S. could launch harder strikes if Iran retaliates, after earlier threatening to target Kharg Island, a major Iranian oil export terminal.
Hormuz is one of the world's most important oil-shipping routes, so any prolonged disruption could push crude prices higher, adding to fuel and transportation costs and potentially putting fresh pressure on inflation. That would be negative for consumers and could make it harder for the Federal Reserve to hold interest rates.
ADP data, factory orders and the Beige Book due
Investors will get several economic updates on Wednesday, including the ADP private payrolls report, factory orders and the Federal Reserve's Beige Book. The ADP report offers an early read on the labor market ahead of the government's monthly jobs report, while the Beige Book gives the Fed's latest assessment of economic activity, prices and hiring across its 12 districts.
Weak data could support expectations for lower rates; stronger-than-expected numbers could reinforce the case for the Fed to keep policy tight. Separately, the Bank of Canada is expected to hold its benchmark rate unchanged at 2.25%, and investors will watch its statement for clues on how other central banks are responding to persistent inflation and elevated borrowing costs.
Bond yields keep climbing
Rising government bond yields remain a major source of pressure on markets. The U.S. 10-year Treasury yield is approaching 5%, close to a three-year high, while Australia's 10-year government bond yield has climbed to its highest level in more than 15 years and Japan's 10-year yield is around 30-year highs.
Higher yields make bonds more attractive relative to stocks and raise borrowing costs across the economy, a particular concern for growth and technology stocks whose valuations lean on future profits. Investors now face a combination of elevated yields, renewed Middle East tensions and uncertainty over the Fed's next move.
Source: Investing.com
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