S&P 500 futures rise as soft jobs data cuts Fed hike odds
- S&P 500 futures advanced 0.69% as soft jobs data lowered Fed hike odds
- Polymarket odds for an up open stand at 47% for October 5
- Brent crude fell 0.57% to $101.67 despite Strait of Hormuz tensions
- Nasdaq 100 futures led gains with a 0.98% rise
*this image is generated using AI for illustrative purposes only.
US equity futures are trending higher early Monday as Wall Street processes a softer September jobs report and shifting geopolitical dynamics. The market-implied probability for a December rate hike dropped from 95% to 86%, while October hike odds fell from 70% to 23%.
Polymarket, a prediction platform based on Polygon, reflects a split but slightly bearish sentiment for the October 5 trading session. The "S&P 500 (SPX) Up or Down on October 5?" contract currently indicates a 47% chance of a higher open.
Futures performance and rate expectations
Equity futures point to a green open across major benchmarks, led by technology stocks. Nasdaq 100 futures rose 0.98%, S&P 500 futures advanced 0.69%, and Dow Jones futures gained 0.46%. Russell 2000 futures dipped slightly, falling 0.17%.
The softening in labor market data triggered a dovish repricing of Federal Reserve expectations. The significant drop in the probability of near-term rate hikes suggests investors are anticipating a less restrictive monetary policy path.
| Index/Future | Change |
|---|---|
| Nasdaq 100 futures | +0.98% |
| S&P 500 futures | +0.69% |
| Dow Jones futures | +0.46% |
| Russell 2000 futures | -0.17% |
Geopolitical tensions and energy markets
Middle East tensions remain elevated after Iran’s parliament speaker, Mohammad Bagher Ghalibaf, declared that Tehran will not fully reopen the Strait of Hormuz until Washington meets seven conditions. Despite this standoff, Persian Gulf crude exports have rebounded sharply to over 14 million barrels per day.
Consequently, oil prices edged lower. Brent crude dipped 0.57% to $101.67 a barrel, and WTI crude fell 1.04% to $90.16 a barrel.
What the numbers show
A divergence exists between geopolitical risk premiums and actual supply flow. While political rhetoric regarding the Strait of Hormuz remains high, the rebound in crude exports to over 14 million barrels per day has exerted downward pressure on oil prices. This suggests that physical supply availability is currently outweighing geopolitical uncertainty in energy pricing.
Upcoming earnings and economic data
Investors are shifting focus to the third-quarter earnings season. Key companies slated to report include Delta Air Lines Inc. (NYSE: DAL), PepsiCo Inc. (NASDAQ: PEP), and Levi Strauss & Co. (NYSE: LEVI). On the economic front, attention is turning to the ISM Non-Manufacturing Composite index and the release of the September FOMC meeting minutes on Wednesday.
Economist Mohamed El-Erian noted that Treasury market dynamics are spilling over into credit and spread risk. He cited high-yield credit spreads and the widening gap between French and German government bonds as evidence of growing vulnerability. El-Erian warned that when global liquidity tightens, markets may expose structural fiscal weaknesses.
Previous session recap
The October 2 Polymarket contract resolved "Up," recording $44,244 in total trading volume. On Thursday, major ETFs tracking US indices closed higher:
- SPDR S&P 500 ETF Trust (NYSE: SPY) rose 0.74% to $769.64
- Invesco QQQ Trust ETF (NASDAQ: QQQ) rose 1.02% to $749.58
- State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE: DIA) ended 0.49% higher at $511.10
How might the significant drop in October rate hike odds influence the Federal Reserve's communication strategy ahead of the upcoming FOMC minutes?
Will the divergence between small-cap weakness and tech-led gains persist if the labor market continues to soften?
Can crude oil prices sustain their downward trend if Middle East geopolitical rhetoric escalates despite current high supply levels?
18
Create Custom Screeners 
Access 200+ Pre-built Filters 
Use 50+ Readymade Screener 
