U.S. Stock Futures Decline as Rising Yields, Oil Prices Mark Start of September

U.S. stock index futures slipped on Tuesday, signaling a lower open for Wall Street as investors contended with rising government bond yields and higher oil prices. The negative sentiment marks the start of September, a month that has historically been the weakest for equity performance.

Pressure Points for Equities

Investor risk appetite was dampened by a selloff in U.S. Treasuries that pushed yields to multi-month highs, making the fixed-income instruments more attractive relative to equities. At the same time, a more than 1.8% gain in Brent crude futures stoked concerns about persistent inflationary pressures, which could keep borrowing costs elevated for longer.

According to Reuters data at 4:46 a.m. ET, the market reflected broad-based caution:

• Dow E-minis were down 251 points, or 0.48%.
• S&P 500 E-minis fell 37 points, or 0.48%.
• Nasdaq 100 E-minis declined 244 points, or 0.83%.

Adding to the headwinds is seasonal weakness. The S&P 500 has lost an average of 0.7% in September since 1926, the only month with a negative average return, according to data from Finaeon cited by Fisher Investments.

Economic Data and Analyst Outlook

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Investors are looking ahead to key labor market data for insight into the Federal Reserve's policy path. The Job Openings and Labor Turnover Survey (JOLTS) is due later Tuesday, followed by the more comprehensive nonfarm payrolls report on Friday. Glenmede investment strategists noted that a report near consensus would reinforce the view that the Fed's timing for any policy shift "hinges more on the path of price pressures than on the pace of payroll growth."

Analysts are weighing the impact of persistently high interest rates. "The low-rate era is unlikely to return soon," wrote Richard de Chazal, a macro analyst at William Blair, in a note. However, Anthony Saglimbene, chief market strategist at Ameriprise Financial, suggested that "the fundamental backdrop for stocks and the economy is sound" and that investors may be better served staying invested through the volatility.

Premarket Corporate Movers

Several companies saw notable premarket activity. Shares of Robinhood (HOOD) rose 2.5% after an upgrade from Morgan Stanley. Hut 8 (HUT) gained 1.77% following reports of a deal to develop a new data center.

In the energy sector, rising crude prices lifted shares of major producers. Exxon Mobil (XOM) and Devon Energy (DVN) were both up more than 1% in premarket trading.