Dow, Nasdaq Futures Dip As Traders Brace For Jobs Data — Strategist Sees AI, Rate Cuts Powering S&P 500 To 8,000 By 2026

U.S. stock futures point to a slightly lower opening on Tuesday as the market reopens after the Labor Day holiday. Traders may prefer to exercise restraint as the major stock market gauges trade just shy of their all-time highs. 

The imminent release of the non-farm payrolls report for August, which is widely expected to be a significant input for policymakers deliberating the September rate decision, could also introduce caution.

As of 4 a.m. ET on Tuesday, the Dow, S&P 500, Nasdaq 100 and Russell 2000 futures were all down more than 0.25%, while the Russell 2000 futures slid about 0.50%.

Stocks recorded losses for the week ended Aug. 29, as adverse reactions to key tech earnings, including those from Nvidia (NVDA), and mixed data points tempered market optimism. Nevertheless, the S&P 500 Index hit fresh highs, topping 6,500 for the first time, before retreating below the psychological level.

For the week, the SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S&P 500 Index, edged down 0.04%, and the Invesco QQQ Trust (QQQ) fell 0.28%. The SPDR Dow Jones Industrial Average ETF Trust (DIA) slipped 0.12%, while the iShares Russell 2000 ETF (IWM) added 0.14%.

August turned out to be unseasonably strong for stocks amid rising odds of rate cuts. The S&P 500 Index, the Nasdaq Composite, and the Dow Jones Industrials gained 1.91%, 1.58% and 3.20%, respectively, for the month.

Traders will have the opportunity to sift through a deluge of labor market indicators this week, including the August non-farm payrolls report, due on Friday, the ADP private payrolls report that precedes it, the weekly jobless claims report, and the Job Openings and Labor Turnover report for July.

The spotlight will also likely be on the results of the private sector activity surveys by S&P and the Institute for Supply Management (ISM), the Federal Reserve’s Beige Book, the July trade balance report, and a few Fed speeches.

On Tuesday, the S&P is scheduled to release its final manufacturing purchasing managers’ index (PMI) for August at 9:45 a.m. ET. The ISM’s manufacturing PMI data will be released at 10 a.m. ET. 

The Commerce Department is due to release its construction spending report for July at 10 a.m. ET. 

Nio (NIO), Signet Jewelers (SIG) and Zscaler (ZS) are among the companies reporting on Tuesday.

Evercore ISI Chief Equity and Quantitative Strategist Julian Emanuel lifted his end-of-the-year S&P 500 price target to 6,250 from 5,600 in a note released Sunday, the MarketWatch reported.

This, however, implied a downside from current levels, as he believes “scares are a part of innovation-driven bull markets as their narratives are stress tested in real time.”

That said, the strategist is bullish about the next year, expecting the broader gauge to rise to 7,750, with the AI revolution and an accommodating Fed providing support, just as during the dot-com revolution.

“The critical difference being that in 2025-’26 a Fed that is increasingly carrying President Trump’s imprimatur is not going to hike rates at any time before the 2026 midterm elections, regardless of the ‘economic brew.” In such a scenario, the S&P 500 could climb to 9,000, he added.

Crude oil futures are rallying nearly 1% early Tuesday, gold futures hit a fresh record of $3,578.20, and the 10-year Treasury note yield traded under the 4.3% level, reflecting hopes for a Fed funds rate cut.

The greenback, however, was firmer against most major currencies.

Asian stocks ended Tuesday’s session on a mixed note.

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