U.S. stock futures traded modestly lower during Asian trading Monday, caught between weaker-than-expected September employment data and climbing Treasury yields that kept investors cautious heading into earnings season.
S&P 500 Futures fell 0.1 percent to 7,768.50, Nasdaq 100 Futures slipped 0.1 percent to 31,035.0, and Dow Jones Futures declined 0.1 percent to 51,435.0 by 02:49 ET.
The Labor Department reported 29,000 new jobs in September versus expectations for 90,000—a significant miss that forced a reality check on labor market strength. August payroll growth was revised down to 133,000 from 162,000. The unemployment rate rose to 4.2 percent from 4.1 percent.
The soft labor data immediately repriced Fed expectations. CME FedWatch data showed traders pricing in an 80 percent probability the Fed holds rates steady this month, down sharply from previous expectations of a hike. That shift triggered a tech rally Friday: the Nasdaq Composite rose 1.2 percent, the S&P 500 gained 0.7 percent, and the Dow added 0.5 percent.
But the reprieve is fragile. The 10-year Treasury yield dipped to 5.17 percent after the jobs report, then reversed to 5.28 percent as investors reassessed inflation risks. Oil remains a headwind: Brent crude continues trading above $100 per barrel on supply concerns tied to Iran-related disruptions. Elevated energy prices threaten to keep inflation sticky above the Fed's comfort zone, pressuring corporate margins at a time when borrowing costs are already elevated.
Third-quarter earnings season begins this week. Results will determine whether companies can maintain profit expectations during higher financing costs and energy headwinds—the real test of whether equities can sustain gains on Fed relief alone.
