- U.S. stock futures were slightly lower ahead of the opening bell on Tuesday.
- Traders reacted to factory data showing activity expanding for the first time since September 2022.
- According to CME Group, there is now a 40% chance that the Fed will keep interest rates at current levels through June.
U.S. stock futures fell early on Tuesday as traders backed off expectations for a June interest rate cut following positive factory data.
The benchmark S&P 500 index is expected to be down about 0.1% at the opening bell, while futures for the Nasdaq 100 and Dow Jones Industrial Average were in the red as of 5 a.m. ET.
The sell-off was prompted by better-than-expected ISM Manufacturing Business Index data, which showed activity expanding for the first time since September 2022.
When the U.S. economy looks strong, the Federal Reserve has less reason to cut interest rates. Following Monday’s factory data, traders believe there is a 40% chance that the central bank will choose to keep borrowing costs at current levels until June, according to the CME FedWatch tool.
“The strong manufacturing ISM data has reignited doubts about the extent of the Fed’s rate cuts this year,” Deutsche Bank’s Jim Reed said in a research note.
Meanwhile, the 10-year Treasury yield remained flat after rising more than 10 basis points on Monday.
In London, the blue-chip FTSE 100 index rose 0.35% to 7,980 points.
