Sept 1 (Reuters) – U.S. stock index futures slipped on Tuesday, extending a weak run as elevated bond yields and higher oil prices kept investors at bay at the start of a historically weak month for equities.
A sharp increase in rate-hike bets has soured sentiment in recent sessions, and renewed clashes in the Middle East have exacerbated worries that borrowing costs may need to rise to contain price pressures.
The selloff in U.S. Treasuries also pushed yields to their highest in months, dampening risk appetite further. Higher yields on risk-free Treasuries make it less attractive for investors to take on the added risk of buying equities.
“Yields may not spike into crisis territory, but the low-rate era is unlikely to return soon,” wrote Richard de Chazal, macro analyst at William Blair.
“The balance of risks still points to yields remaining elevated.”
Investors are also contending with seasonal weakness. Since 1926, the benchmark S&P 500 has lost 0.7% on average in September, making it the weakest month for stocks and the only one with a negative average return, according to Fisher Investments, which cited data from Finaeon.
Still, historical trends may not be a reason to step away from stocks, said Anthony Saglimbene, chief market strategist at Ameriprise Financial.
“The fundamental backdrop for stocks and the economy is sound. We believe investors are better served staying invested through the seasonal chop than trying to time around it,” he added.
At 4:46 a.m. ET, Dow E-minis shed 251 points, or 0.48%, S&P 500 E-minis were down 37 points, or 0.48%, and Nasdaq 100 E-minis fell 244 points, or 0.83%.
JOBS DATA TAKES CENTER STAGE
The Labor Department’s Job Openings and Labor Turnover Survey, also known as the JOLTS report, will be in focus later in the session, ahead of the more crucial nonfarm payrolls data on Friday.
The reports are expected to be analyzed for clues on the health of the labor market after Federal Reserve Chair Kevin Warsh said taming inflation is the central bank’s chief focus.
“The Fed’s focus remains squarely on inflation. A (payrolls) report landing near consensus would reinforce the view that the timing of any future policy shift hinges more on the path of price pressures than on the pace of payroll growth,” Glenmede’s investment strategists wrote.
Big movers in the premarket session included Robinhood, which rose 2.5% after Morgan Stanley upgraded the stock.
Hut 8 added 1.77% after Reuters and other media reported that the digital infrastructure firm will develop a data center as part of a cloud deal between Anthropic and Lambda.
Energy stocks rose following a 1.86% gain in Brent crude, with Exxon Mobil and Devon Energy up more than 1% each.
(Reporting by Niket Nishant in Bengaluru; Editing by Maju Samuel)
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