US pre-open: Wall Street futures dip as rate cut expectations cool
By Iain Gilbert
Date: Tuesday 02 Sep 2025
(Sharecast News) - Wall Street futures were firmly in the red ahead of the bell on Tuesday as investors reassessed the likelihood of a Federal Reserve rate cut later this month.
As of 1230 BST, Dow Jones futures were down 0.55%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.71% and 0.92% weaker, respectively.
The Dow closed 92.02 points lower on Friday as weakness in AI-linked tech stocks and cautious inflation data prompted a broad market retreat.
While markets had priced in an 80% chance of easing, several analysts now suggest the odds are closer to 50-50, citing resilient GDP growth, stable financial conditions, and persistent inflation pressures. The shift follows Federal Reserve chairman Jerome Powell's recent remarks at Jackson Hole, which hinted at a possible rate cut but stopped short of committing, with that ambiguity triggering a bout of caution, especially with cyclical stocks outperforming defensives - suggesting investors may have overestimated the urgency for monetary easing.
Uncertainty regarding the future independence of the Federal Reserve was drawing an amount of investor attention on Tuesday after a court hearing seeking to temporarily block Trump from dismissing Fed Governor Lisa Cook concluded on Friday without a ruling. Separately, Stephen Miran, a Trump nominee to the Fed board, was due to appear before the Senate Banking Committee on Thursday.
Also in focus early on Tuesday was news that a federal appeals court has ruled that most of Donald Trump's global tariffs were unlawful, determining that only Congress holds the authority to impose broad levies. The 7-4 decision from the US Court of Appeals for the Federal Circuit was expected to be challenged, with Trump labelling the ruling "Highly Partisan" and vowing to appeal to the Supreme Court.
On the macro front, S&P Global's August manufacturing PMI will be published at 1445 BST, with the Institute for Supply Management's set to follow at 1500 BST, alongside July construction spending data.
Rostro's Joshua Mahony said: "Later today, the ISM manufacturing PMI in the US could dictate the afternoon tone. The market is braced for another sub-50 reading, although things are worse than they seem given the fact that the reading of 48 is propped up by the 64.8 prices paid element. The fact that we continue to see weakness across the employment (43.4) and new orders (47.1) metrics does highlight the cause for concern as we head into a period dominated by jobs data."
Market participants were also keeping a keen eye on a surge in bond yields to start the month, with the yield on the benchmark 10-year Treasury note jumping to 4.29%, while the 30-year yield was approaching 4.98%.
No major corporate earnings were slated for release on Tuesday.
Reporting by Iain Gilbert at Sharecast.com
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