Stocks looked set to fall on Tuesday, with investors shifting to a risk-off mood ahead of delayed unemployment data that could help decide whether the Federal Reserve has scope to cut interest rates next year.
Futures tracking the Dow Jones Industrial Average slipped 136 points, or 0.3%. S&P 500 futures dropped 0.4%, and contracts tied to the Nasdaq 100 slumped 0.5%.
The three major indexes all dropped on Monday, with Wall Street dumping tech stocks in a bid to take profit following years of outperformance. Any hopes of a further rally likely hinge on Tuesday’s jobs report, which will cover November employment data plus some October measures.
If the figures come in below expectations, that would fuel further worries about the health of the U.S. economy–but it may end up being a “bad news is good news” situation, considering a weaker labor market would bolster the case for further Fed rate cuts in 2026.
“From a market perspective, the most important question is whether the report opens the door for more rate cuts in the early part of next year,” Deutsche Bank analyst Jim Reid said. “As it stands, the Fed have only signalled one further cut for 2026 in the dot plot, but we’ve repeatedly seen in this cycle how a softer labour market has pushed them back in a dovish direction.”
The other events over the next few days that could move the dial for investors include delayed consumer-price inflation data; policy decisions from the Bank of England, European Central Bank, and Bank of Japan; and earnings from memory-chip maker Micron, which come at a time when investors are fretting about demand for artificial intelligence.
The yield on the 10-year Treasury note slipped 1 basis point to 4.17% on Tuesday. The dollar was down 0.1% against a weighted basket of its peers and gold futures dropped 0.7% to $4,304 an ounce. Bitcoin, the large-cap cryptocurrency, dropped 4% over the past 24 hours to $86,245.