Nasdaq and Dow Jones Futures were trading lower with Nasdaq down by 0.8 percent after opening the trading session flat. Asian markets were slightly positive on Tuesday. European Markets were trading slightly positive while FTSE was flat. US markets were closed on Monday due to Labor Day holiday and global markets were range-bound on Monday. Market players are concerned about the economic data to be released this week.

In a shortened trading week, investors are focusing on key economic data releases that could influence the Federal Reserve’s upcoming interest rate decision on September 18. Dow Jones Industrial Average futures dipped by 160 points, or 0.4%, while S&P 500 futures declined by 0.5% and Nasdaq 100 futures fell by 0.8%. As markets brace for the latest nonfarm payroll report, set to be released on Friday, the figures are expected to provide critical insight into the Fed's stance on rate cuts. The question remains: Will it be a 25 or 50 basis point reduction?

Markets Cautious Ahead of Nonfarm Payroll Report

Investors Exhibit Risk Aversion

Investors are displaying caution as they anticipate the release of the nonfarm payroll report later this week. Scheduled for Friday, the report is expected to show 164,000 new hires in August, a figure that could significantly influence the Federal Reserve's decision on whether to cut interest rates by 25 or 50 basis points. This report will be closely scrutinized as central bankers prepare for their mid-September meeting, where they are widely expected to announce a rate cut aimed at sustaining economic growth amid global uncertainties.

August Delivers Strong Gains Across Major Indexes

S&P 500, Nasdaq, and Dow End August on a High Note

Despite the prevailing caution, the S&P 500 concluded August with a solid 3.7% gain, while the Nasdaq and the Dow each climbed 3%. Historically, however, September has not been favorable for U.S. equities, with the S&P 500 retreating in each of the past four Septembers. Analysts often remind investors that past performance does not guarantee future results, leaving room for both optimism and prudence as the new month begins.

Tech Sector Faces Pressure Amid Falling Chip Stocks

Nvidia, Broadcom, and AMD Lead Declines

The tech-heavy Nasdaq was under pressure, driven primarily by a 2.3% premarket drop in Nvidia’s shares. Other semiconductor stocks, including Broadcom and Advanced Micro Devices, also experienced declines. Meanwhile, shares of tech giants Facebook and Microsoft edged slightly lower, adding to the sector's subdued performance. The tech sector’s sensitivity to economic data and potential rate cuts makes it particularly vulnerable to investor sentiment this week.

ISM Manufacturing Data in Focus Before Jobs Report

Manufacturing Sector Slack Already Priced In

Before the all-important jobs report on Friday, investors will scrutinize the ISM Purchasing Managers' Index (PMI) for the manufacturing sector, set for release on Tuesday. The PMI is expected to show a modest improvement from 46.8 to 47.5 in August. According to ING analyst Francesco Pesole, the manufacturing sector's weakness has been priced in, and only a significantly lower-than-expected reading would trigger recession concerns and drive the U.S. dollar lower.

10-Year Treasury Yield Remains Steady

Benchmark Yield Holds Near 3.914%

The yield on the benchmark 10-year Treasury note stood at 3.914% early Tuesday, remaining broadly flat compared to the previous week. As investors continue to weigh the likelihood of an economic slowdown and the potential for further rate cuts, Treasury yields will remain a key barometer of market sentiment.

As the week unfolds, all eyes will be on the U.S. economic data releases, particularly the nonfarm payroll report, which could tip the scales on the Federal Reserve’s impending interest rate decision. Investors are treading carefully, balancing optimism with caution, as they navigate a landscape shaped by both strong market performance in August and the looming uncertainties of September.