U.S. stock futures edged higher in Asian trading on Tuesday after the Nasdaq Composite closed at a record high on Monday, driven by a sharp reduction in market expectations for a Federal Reserve interest-rate hike this month. The move sets the stage for the start of the quarterly earnings season, with investors now weighing corporate results against a shifting monetary policy backdrop.
Dow Jones Futures rose 0.3% to 51,711.0 points by 02:46 ET (06:46 GMT). S&P 500 Futures increased by 0.2% to 7,841.25 points, while Nasdaq 100 Futures climbed 0.2% to 31,392.75 points.
In Monday's regular session, the NASDAQ Composite gained 1.1% to close at a record 27,477.31. The S&P 500 rose 0.7%, moving close to its own record high, while the Dow Jones Industrial Average added 0.2%. Technology shares led the advance, with Nvidia rising 2.1% to reach a record market value of approximately $5.76 trillion. Microsoft, Meta Platforms and Tesla also posted gains.
This rally extends a trend that began following Friday's employment report, which indicated that U.S. job growth slowed more than expected in September. According to CME FedWatch data, traders now price in about a 20% chance of an October rate hike, down from roughly 70% a week earlier. A December increase remains largely priced in by the market.
The softer rate outlook has supported equities even as borrowing costs stay elevated. The 10-year Treasury yield rose to 5.31% on Monday, approaching levels seen in 2002, as investors assessed heavy government debt issuance and persistent inflation risks.
Oil prices offered some relief to equity investors. Brent crude edged lower in Asian trading on Tuesday after settling down 2% on Monday. The decline followed an increase in Middle East crude exports and pledges from Group of Seven nations to boost supplies, although concerns over disruptions linked to the U.S.-Israeli conflict with Iran persisted.
Market attention now turns to upcoming financial releases. Major U.S. banks are set to kick off their third-quarter reporting cycle next week, while PepsiCo and Delta Air Lines are among the firms scheduled to disclose results this week. Additionally, the Federal Reserve's minutes from its September meeting are expected Wednesday, offering potential insights into how policymakers are interpreting inflation data and the recent cooling in labor market activity.