Dow Jones Futures Rise As Markets Bet On Fed Rate Hold, Tech Recovery

• US indices futures advance as traders expect Fed rates to remain unchanged in October.

• Tech giants and chipmakers rallied during Monday’s session, helping the S&P 500 and Nasdaq recover losses.

• Traders are shifting focus to a busy Tuesday earnings lineup including Netflix, GM, and United Airlines.

Dow Jones futures gain by 0.38% to trade near 52,380 during European hours on Tuesday. S&P 500 futures surge 0.13% to trade around 7,740, while Nasdaq 100 futures lose by 0.12% to near 29,690.

US stock futures rose as market expectations grew that the Federal Reserve (Fed) will leave interest rates unchanged. According to the CME FedWatch tool, Fed funds futures traders expect the central bank to maintain current rates at its October policy meeting, while pricing in an 89.4% probability of a rate hike in December.

Fed Chair Kevin Warsh expressed optimism last week regarding the resilience of the US economy, though he refrained from offering specific guidance on the timing or likelihood of future rate adjustments.

Wall Street initiated the week with mixed results, supported by a recovery in technology shares. During Monday’s regular US session, the Dow Jones edged lower by 0.07%, while the S&P 500 and Nasdaq Composite rose 0.41% and 1.11%, respectively, rebounding from last week’s sharp selloff driven by growing concerns over AI financing.

Chipmakers and other mega-cap stocks led the recovery, with Micron, Nvidia, SanDisk, Amazon, and Tesla making gains. Investors are now preparing for a busy corporate earnings schedule on Tuesday, with reports expected from General Electric, Netflix, Raytheon Technologies, United Airlines, and General Motors, among others.

AI rebound lifts US yields as markets lean toward more Fed tightening

Strategists at Deutsche Bank highlight that the stabilisation in AI‑related stocks “also pushed US Treasury yields higher, as it countered fears about an AI-related slowdown.” They note that the move was driven predominantly by real yields, with “higher real yields” accounting for “the bulk of the rise in Treasury yields yesterday, rather than inflation breakevens.” As a result, “Treasury yields saw a consistent rise across the curve, with the 2yr yield (+6.5bps) up to 4.77%, whilst the 10yr yield (+6.6bps) rose to 5.14%.” Deutsche Bank adds that “optimism on the growth side” fed into the policy outlook, as investors “priced in slightly more rate hikes for the months ahead,” with “74bps of hikes…priced in by the June 2027 meeting at the close, up +7.7bps relative to Friday.”