U.S. stock futures pointed to a weaker open on Tuesday as traders returned from the Labor Day holiday to confront a convergence of risks: crude oil climbing toward triple digits, an escalating confrontation between Washington and Tehran, and a fresh round of tariffs between the United States and Canada.
Dow Jones Industrial Average futures fell 0.8% to 53,013 points, while S&P 500 futures slipped 0.3% to 7,691.3 points. Nasdaq 100 futures were roughly flat at 29,593 points. The declines extended a pullback that began Friday, when an unexpectedly strong August jobs report pushed Treasury yields higher and boosted expectations that the Federal Reserve could raise interest rates at its meeting next week.
Brent crude, the international benchmark, rose 1.4% to $99.73 a barrel, its highest level in six weeks. West Texas Intermediate climbed 1.5% to $94.28. The gains came as Iran’s Supreme National Security Council secretary, Mohsen Rezaei, warned that further U.S. economic pressure would be met with a maritime exclusion zone spanning the Persian Gulf toward the perimeter of what he called the U.S. blockade. He added that Iran’s posture toward American warships and military bases had been “fundamentally recalibrated.”
Attacks by Iranian-backed Houthi forces on Saudi Arabia have compounded worries about the security of energy infrastructure and shipping lanes in a region that remains central to global oil supply. Any sustained disruption could push crude above $100 and feed directly into inflation through higher fuel, transportation, and production costs.
Kyle Rodda, senior financial market analyst at Capital.com, said the military activity is “maintaining a significant risk premium in energy markets amidst the heightened possibility of deeper and more protracted disruptions to global supply.” He noted that the inflation picture is becoming murkier because of the rally in oil prices following the exchange of strikes between the U.S. and Iran in the Strait of Hormuz.
The benchmark 10-year Treasury yield traded near 4.80%, reflecting both the stronger labor market data and the inflation risks embedded in energy prices. Spot gold traded around $4,396.14 an ounce.
Rate Hike Bets Firm Ahead of Inflation Data
Traders are now pricing in a 60% probability that the Federal Reserve will lift its benchmark rate by a quarter percentage point next week, according to CME Group’s (CME) FedWatch tool. That marks a notable shift from earlier expectations that the central bank would remain on hold.
August’s Producer Price Index and Consumer Price Index reports, both due later this week, could sharpen or upend those odds. If the data show inflation accelerating, the case for a September hike strengthens. If energy-driven price pressures are offset by softer core readings, policymakers may retain more flexibility.
The Treasury will also auction three-year notes on Tuesday, offering a read on investor appetite for government debt at a time when the national debt has surpassed $40 trillion. Rising yields have already pushed borrowing costs higher for the government, corporations, and mortgage holders. A sustained climb in yields tends to make equities less attractive, particularly growth-oriented technology companies whose valuations depend heavily on future earnings.
Trade Fight With Canada Escalates
Canada’s retaliatory tariffs on $20 billion worth of U.S. goods took effect just after midnight Tuesday, deepening a trade dispute that has rattled cross-border supply chains. Prime Minister Mark Carney has increased economic pressure on the country’s largest trading partner after negotiations collapsed last month.
President Donald Trump added a new front to the conflict on Monday, saying Canada-based business jet maker Bombardier (BDRBF) would not be permitted to sell planes in the United States unless it manufactures them domestically. The U.S. market accounts for more than half of Bombardier’s revenue, which is projected to reach about $10.2 billion in 2026. Losing full access could put roughly $5 billion in annual sales at risk.
The threat is the latest example of how quickly trade policy can reshape the outlook for companies with large international operations. Trump has previously used tariffs and restrictions as leverage in negotiations, and investors are now weighing whether the Bombardier comments signal a broader escalation or a bargaining tactic.
Global Markets Reflect the Uncertainty
European markets traded lower as investors assessed the same geopolitical and macroeconomic forces. Asia-Pacific markets finished mixed, with Hong Kong’s Hang Seng Index dropping 0.38% and Japan’s Nikkei falling 1.70%. The Topix lost 1.83%. In China, the Shanghai Composite rose 0.20% and the Shenzhen Component added 0.14%.
Oil prices have now climbed for three consecutive sessions. The $100 threshold matters beyond its psychological weight: a sustained break above that level would signal that the latest supply shock is becoming a broader inflation risk. That, in turn, would make it harder for central banks to lower rates and could pressure rate-sensitive stocks further.
Energy producers may benefit from higher crude prices, but the broader market faces a difficult setup. Investors are contending with a labor market that remains resilient enough to justify tighter policy, an inflation trajectory complicated by geopolitical conflict, and a trade relationship with a major partner that continues to deteriorate.
On the earnings calendar, GameStop (GME), Braze (BRZE), and Casey’s General Stores (CASY) are scheduled to report quarterly results on Tuesday. The ADP Employment Change report will also provide a more current snapshot of private-sector hiring conditions ahead of the government’s official data.