Dow futures fall as oil prices and Treasury yields rise

Dow futures retreated in early Monday trading, pressured by a sharp rise in Treasury yields, which rose to their highest levels in two months. Rising tensions in the Middle East added further uncertainty, contributing to cautious market sentiment and a the increase in the price of oil.

Investors are now speculating whether the Federal Reserve will cut interest rates ahead of the upcoming election, a decision complicated by two key factors: decrease in the unemployment rate and one inflation report expected later this week.

CME Group’s FedWatch toolwhich measures market expectations for changes in the Fed funds rate, shows traders now peg a 91 percent chance of a quarter-percentage-point rate cut at the Federal Reserve’s next meeting in November.

In premarket trading, Dow futures fell 156 points, or 0.37 percent. Nasdaq, with heavy technology (NDAQ) futures fell 0.4 percent, while S&P 500 futures fell 0.3 percent. Meanwhile, the yield on the 10-year Treasury, a benchmark for mortgages and auto loans, rose above 4 percent on Monday, hitting its highest level since early August. Also, 2-year notes rose five basis points to 4%.

Oil prices continued to rise, taking international benchmark Brent crude futures closer to $80 a barrel, while US West Texas Intermediate futures were above $73. after a new round of Israeli attacks on terrorist targets in Lebanon.