Market Caution: Stock Indexes Dip Ahead of Economic Data

U.S. stock futures fell on Tuesday, influenced by upcoming economic reports that might impact Federal Reserve's monetary policy. The Dow and S&P 500 had recorded gains last week. Traders focus on the ISM manufacturing survey and labor market data. Semiconductor stocks saw premarket declines, whereas Tesla rose.

U.S. stock index futures traded lower on Tuesday as caution prevailed ahead of several economic data reports expected throughout the week, which could shape the extent of monetary policy easing by the Federal Reserve this year.

Both the blue-chip Dow and the benchmark S&P 500 rebounded from early August losses to end higher last Friday, marking their fourth-straight monthly gain, following data indicating a robust economy and moderated price pressures. While the Dow set a new record, the S&P 500 nears its own milestone as markets prepare for a traditionally challenging month.

Traders are eagerly awaiting economic indicators, with the ISM manufacturing survey release scheduled for 10 a.m. ET. Though economists predict a rise to 47.5, it remains in contraction. Labor market figures will also be scrutinized ahead of Friday's non-farm payroll report. July's report hinted at an unexpected slowdown, igniting a global selloff in riskier assets.

The Federal Reserve's upcoming meeting later in the month will be closely watched, following Chair Jerome Powell's recent endorsements for policy adjustments. According to the CME Group's FedWatch Tool, there's a 69% probability of a 25-basis point interest rate cut and a 31% chance for a 50 bps reduction.

At 05:30 a.m. ET, Dow E-minis dropped 178 points (0.43%), S&P 500 E-minis fell 30 points (0.53%), and Nasdaq 100 E-minis were down 161 points (0.83%).

Sensitive to interest rate changes, chip stocks led premarket declines, with Nvidia falling 2.3%, Broadcom 1.8%, and Advanced Micro Devices 1.3%, following the Philadelphia SE Semiconductor index's 2.6% rise on Friday. Conversely, Tesla's shares increased nearly 1%, encouraged by a report on new production plans for its Model Y in China and record sales in August.

Boeing slipped 2.6% after Wells Fargo downgraded it to 'underweight' from 'equal weight'. U.S. Steel fell 5% following Democratic presidential candidate Kamala Harris's concerns over a potential acquisition by Japan's Nippon Steel.

(With inputs from agencies.)