U.S. stock futures moved mostly lower as investors returned from the Labor Day holiday, with rising oil prices, escalating tensions in the Middle East and renewed U.S.-Canada trade friction weighing on sentiment.

Dow Jones Industrial Average futures fell around 308 points, or 0.6%, while S&P 500 futures slipped 0.2%. Nasdaq-100 futures moved against the broader trend, gaining around 0.1%.

Asian markets were mixed in Tuesday trading. South Korea’s Kospi rose 0.75%, while Japan’s Nikkei 225 declined 0.95%. Australia’s S&P/ASX 200 was down 0.22%.

Energy markets remained a major focus after another escalation between the U.S. and Iran over the weekend. Oil prices climbed to six-week highs, with Brent crude rising 1.1% to $97.31 per barrel and West Texas Intermediate gaining 1.3% to $92.66.

The recent surge in crude prices has added to concerns that higher energy costs could keep inflation elevated. Those worries have also contributed to upward pressure on government bond yields. Last week, the benchmark 10-year U.S. Treasury yield reached its highest level since November 2023, while the 2-year yield climbed to its highest since January 2025.

Attention is now turning to the Federal Reserve’s policy meeting next week. Markets are currently pricing in around a 60% probability of a 25-basis-point rate hike.

That outlook could shift significantly following this week’s inflation releases. Wholesale inflation data is scheduled for Thursday, followed by consumer inflation figures on Friday. Further gains in energy prices could also influence expectations for the Fed’s next move.

Trade tensions are adding another layer of uncertainty. Canada is set to introduce retaliatory tariffs on roughly $20 billion worth of U.S. goods on Tuesday. The move comes as President Donald Trump increases pressure on Canada, including threatening restrictions on aircraft manufacturer Bombardier unless more production is moved to the United States.

With oil prices climbing, bond yields elevated and several major policy and inflation events approaching, investors are likely to remain cautious as the shortened trading week gets underway.

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