US stock futures advanced during European hours on Tuesday, with Dow Jones futures up 0.47% to near 51,800, S&P 500 futures rising 0.24% to around 7,840, and Nasdaq 100 futures gaining 0.27% to trade near 31,400 [1]. This upward momentum follows a wave of softer US employment data, which has significantly reduced expectations for a Federal Reserve interest rate hike in October. According to the CME FedWatch Tool, traders are now pricing in more than a 78% probability that the Fed will keep rates unchanged at its upcoming meeting [1]. A drop in crude oil prices, attributed to signs of expanding supply from the Middle East, has further alleviated inflation concerns and eased pressure on monetary policy tightening [1].
The positive sentiment builds on Monday's robust rally in US equities, where the Nasdaq Composite climbed 1.05% to a new record high, the S&P 500 gained 0.66%, and the Dow Jones Industrial Average rose 0.18%. Megacap technology stocks such as Nvidia, Tesla, and Microsoft led the gains, while SpaceX surged over 7% following reports of a proposed natural gas pipeline in Florida for its Starship launch operations [1]. Analysts at Danske Bank noted that equities finished near session highs, with the Nasdaq reaching a fresh record and the S&P 500 just 0.3% below its all-time peak [1].
Despite the rally in equities, broader market sentiment is tempered by developments in the fixed-income market. US Treasury yields have surged to fresh 24-year highs, reflecting a global bond selloff driven by widening fiscal deficits and persistent inflation. Recent ISM survey data showed that input prices in the US services sector rose at their fastest pace in over four years, reinforcing ongoing cost pressures [1].
Meanwhile, the US Dollar Index (DXY) is holding around 102.10 after modest gains, having pulled back from nearly 18-month highs during European hours on Tuesday [2]. The near-term bias remains bullish, with the index trading above both the nine-day and 50-day EMAs, and the 14-day RSI at 75.6 indicating overbought conditions [2]. Technical analysis suggests a temporary bullish continuation, but a potential bearish reversal could occur if the index breaks below key support levels [2]. ING analysts highlighted that the ISM services index eased to 54.9 from 55.4 (consensus 55.0), but remained in expansion territory. They noted that while business activity and new orders softened, stronger employment, order backlogs, and a fresh high in prices paid helped offset the decline, supporting the view that underlying services-sector demand and inflation pressures remain resilient enough to keep the Dollar supported [2].
CONCLUSION
US stock futures are rising as softer employment data and lower oil prices reduce expectations for a near-term Fed rate hike, fueling optimism in equities, especially among technology leaders. However, persistent inflation and surging Treasury yields continue to temper broader market sentiment. The US Dollar Index remains elevated, supported by resilient services-sector data, but technical indicators suggest a potential for correction if support levels are breached.