US markets today: 5 things to track as oil nears $100, Fed rate-hike bets rise

Wall Street is set for a cautious start to the shortened trading week on Tuesday, September 8, as investors weigh escalating US-Iran tensions, a sharp rise in crude oil prices and growing expectations that the Federal Reserve could raise interest rates next week.

US markets were closed on Monday for the Labor Day holiday. Ahead of Tuesday’s session, Dow Jones futures were down around 0.9%, while S&P 500 and Nasdaq-100 futures were also trading lower.

Here are five key factors that could influence US markets today:

1. US-Iran tensions and crude oil nearing $100

Oil prices have emerged as the biggest immediate risk for Wall Street as

escalating tensions in West Asia raise concerns over global energy supplies.

Brent crude climbed to around $99 a barrel on Tuesday, while US West Texas Intermediate crude rose above $94. Prices hit their highest levels since July and June, respectively, after Iran-backed Houthi militants attacked energy facilities in Saudi Arabia.

Saudi Arabia said operations at some energy facilities were halted after the attacks, which injured 73 people, according to Reuters. The developments have intensified concerns about further disruption to oil flows through the region, including the strategically important Strait of Hormuz.

2. Treasury yields remain elevated

US Treasury yields are another key factor for investors as rising oil prices add to inflation concerns and markets reassess the outlook for interest rates.

The benchmark 10-year Treasury yield has moved close to multi-year highs, while the 30-year yield has also remained elevated. Higher yields can weigh on equities by increasing borrowing costs and making bonds relatively more attractive compared with stocks.

The moves come as investors prepare for a data-heavy week, with producer and consumer inflation figures due later this week.

Also Read: US yields could hit 5.25% in 2027; Standard Chartered bullish on dollar, sees rupee range-bound

3. CPI and PPI data take centre stage

Inflation data will be closely watched as investors try to determine whether the recent rise in energy prices is likely to feed into broader price pressures.

The US Bureau of Labor Statistics is scheduled to release August PPI on Thursday, September 10, followed by August CPI on Friday, September 11, both at 8:30 a.m. ET.

The latest available data showed US consumer prices rose 3.4% year-on-year in July, while core CPI increased 2.5%.

4. Fed rate-hike bets rise

Markets are increasingly focused on the Federal Reserve's September 15-16 meeting, with stronger-than-expected employment data and the surge in oil prices prompting investors to reassess the central bank's next move.

According to the CME FedWatch Tool, traders are now pricing in about a 60% chance of a 25-basis-point interest rate hike at the upcoming policy meeting, up from around 50% before the latest data.

Also Read: Fed’s Waller says hot August CPI could trigger rate hike, September hold still on table

5. Wall Street futures and AI stocks in focus

US stock futures point to a cautious opening after the Labor Day break, with investors returning to markets against a backdrop of geopolitical uncertainty, elevated oil prices and higher rate expectations.

At the same time AI and semiconductor stocks could remain in focus.

Tech stocks extended their recent gains after SanDisk, Dell Technologies and Palo Alto Networks were added to the S&P 100. SanDisk shares jumped 3.6% in overnight trading late Monday, while Dell and Palo Alto Networks gained less than 1%. The four additions, including Arista Networks, will replace Nike, Colgate-Palmolive, Molson Coors Beverage and Simon Property Group, effective September 21.

The S&P 100 inclusion is expected to boost visibility and demand for the stocks from index-tracking funds, potentially supporting trading liquidity and share prices, Yahoo Finance reported. SanDisk had already jumped nearly 12% in Friday's session following the announcement. Lynx Research sees further upside for SanDisk and Micron, while analysts remain broadly bullish on SNDK.

Also Read: Nike shown the way out of S&P 100 after 18 years; here are 4 tech stocks taking its place