U.S. stock futures flat amid caution over interest rates

S&P 500 Futures were flat at 7,646.0 points, Nasdaq 100 Futures were flat at 29,136.25 points, while Dow Jones Futures steadied at 52,837.0 points

U.S. stock index futures moved little on Tuesday evening as caution over interest rates and more strikes on Iran kept investors largely to the sidelines.

S&P 500 Futures were flat at 7,646.0 points by 23:41 GMT, while Nasdaq 100 Futures were flat at 29,136.25 points. Dow Jones Futures steadied at 52,837.0 points.

Futures steadied after a negative session on Wall Street, where major indexes dropped up to 1% in a sluggish start to what is historically viewed as a weak month for equities.

Markets retreated amid renewed military action in the Middle East.

The strikes marked Washington’s second such move against Iran this week, as the two countries remained at odds over the Strait of Hormuz. The U.S. said the waterway remained open, in contrast to claims from Iran that Hormuz remained closed to commercial shipping.

Shipping data showed traffic through Hormuz remained at a fraction of pre-war levels.

Oil prices surged after the renewed action, keeping markets on edge over energy-driven inflation and its impact on the U.S. economy and interest rates.

Wall Street was also spooked by a sustained selldown in Treasury markets, as yields rose to multi-year highs.

This came amid increasing bets that the Federal Reserve will raise interest rates in September, especially after Chair Kevin Warsh reiterated the bank’s commitment to its 2% annual inflation target last week.

Focus this week is squarely on a host of labour market readings, chiefly nonfarm payrolls data due Friday, for more cues on the country’s economy.

Markets are pricing in a 67.9% chance for a 25 basis point hike by the Fed in September, up from 34.7% a week ago, CME Fedwatch showed.

Stronger manufacturing purchasing managers index data for August did little to support Wall Street.