TLDR
- US stock futures edged lower Tuesday as Iran war fears and Fed rate hike bets weighed on sentiment
- Brent crude is trading near $90 per barrel after the US and Iran resumed military hostilities
- Fed Chair Kevin Warsh’s hawkish Jackson Hole speech pushed rate hike odds to 64.4% for September
- The 10-year Treasury yield climbed to 4.75%, adding pressure to risk assets
- Key data this week includes JOLTS Tuesday and the jobs report Friday
Wall Street kicked off September on shaky ground. Stock futures hovered near flat Tuesday morning as investors juggled rising oil prices, higher Treasury yields, and the growing chance of another interest rate hike from the Federal Reserve.
The Dow Jones Industrial Average futures fell 0.7%, while S&P 500 futures slipped around 0.3%. Nasdaq-100 futures dipped 0.1%. This follows a Monday session where all three major indexes closed lower.
Despite the weak start to September, stocks wrapped up August with solid double-digit year-to-date gains. A rebound in technology stocks helped drive those gains after a bruising July.
Iran Conflict Pushes Oil Higher
The renewed tension between the US and Iran is a key driver of the current market unease. The two countries resumed military hostilities on Sunday for the first time in a month, sending oil prices sharply higher.
BREAKING: Iran has just struck an oil tanker with 3 anti-ship cruise missiles in the US-backed southern Omani corridor while completing an outbound transit in the Strait of Hormuz under US escort, per UKMTO.
The vessel is the Saudi VLCC oil tanker "SIDR."
— The Hormuz Letter (@HormuzLetter) August 31, 2026
Brent crude futures are trading near $90 per barrel. The Strait of Hormuz remains closed, with shipping activity running at a fraction of pre-war levels.
Washington also imposed stricter economic sanctions on Tehran last week. That move has cast doubt on any near-term peace efforts in the region.
Higher oil prices feed directly into inflation concerns. That in turn raises the pressure on the Federal Reserve to act.
Fed Rate Hike Odds Jump After Warsh Speech
Markets are now pricing in a 64.4% chance the Fed raises rates by 25 basis points at its September meeting. That is up from 42.7% just one week ago, according to CME FedWatch.
The shift came after Fed Chair Kevin Warsh spoke at the Jackson Hole economic symposium on Friday. Warsh reaffirmed the Fed’s commitment to its 2% inflation target but stopped short of explicitly calling for a rate hike.
The 10-year Treasury yield rose to 4.75%, keeping pressure on equities. Higher yields make borrowing more expensive and can weigh on stock valuations.
This week brings a string of economic data that could move markets further. The JOLTS report drops Tuesday, followed by the monthly jobs report on Friday. Manufacturing data from S&P Global and the Institute for Supply Management are also due.
Earnings from Dell and Palo Alto Networks will give a read on corporate tech and cloud spending.
September is historically the weakest month for US stocks, adding to the caution already building among investors.
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