Wall Street on Edge: Amid Expectations and Tensions

U.S. stock futures fell on Monday as investors recalibrate Federal Reserve rate cut expectations amid geopolitical tensions and pending inflation data. Despite a strong jobs report, Treasury yields hit a multi-month high. Geopolitical tensions and economic performances continue to influence market dynamics.

Investors were on high alert on Monday, as U.S. stock index futures dipped due to recalibrations of expectations for Federal Reserve rate cuts this year. The cautious market sentiment is amplified by geopolitical tensions and impending key inflation data, policymaker comments, and the anticipated third-quarter earnings reports.

The market is currently factoring in an over 85% likelihood of a 25 basis point rate cut at November's Federal Reserve meeting, according to the CME's FedWatch tool. However, a surprisingly robust September non-farm payrolls report, which revealed a significant job market strength, challenges this outlook, pushing Wall Street's fear gauge, the Cboe Volatility index, to its highest in four weeks at 21.17.

Geopolitical concerns have not gone unnoticed, as investors monitor escalating tensions in the Middle East after Hezbollah's rocket attack on Haifa, Israel. Such tensions could further sway market sentiments as crucial economic indicators and corporate earnings unfold this week.

(With inputs from agencies.)