U.S. futures flat as soft jobs data meets high yields

U.S. stock futures traded little changed in Asian sessions on Monday as investors balanced weaker-than-expected labor market data against persistent pressure from elevated Treasury yields and oil prices. S&P 500 futures edged down 0.1% to 7,768.50 points, while Nasdaq 100 futures fell 0.1% to 31,035.0 points by 02:49 ET. Dow Jones futures also slipped 0.1% to 51,435.0 points.

The muted tone follows Friday's session, where the U.S. Labor Department reported that employers added just 29,000 jobs in September, a figure significantly below the 90,000 increase economists had anticipated. The unemployment rate climbed to 4.2% from 4.1%, and August payroll growth was revised downward to 133,000 from an initial report of 162,000.

These labor figures have shifted market expectations regarding the Federal Reserve's monetary policy path. According to CME FedWatch data, traders have scaled back bets on a rate hike, with the market now pricing in roughly an 80% probability that the central bank will leave rates unchanged at its upcoming meeting. The softer labor market backdrop has provided support for rate-sensitive technology shares, which helped drive Friday's gains: the NASDAQ Composite rose 1.2%, the S&P 500 gained 0.7%, and the Dow Jones Industrial Average added 0.5%.

Despite the equity support from jobless claims and payroll data, U.S. stocks face headwinds from a renewed selloff in government bonds and ongoing concerns about energy-driven inflation. Treasury yields initially dropped following the jobs report but subsequently reversed higher as investors remained cautious about the impact of elevated oil prices on inflation. The 10-year U.S. Treasury yield briefly dipped below 5.17% before rebounding to approximately 5.28%.

Oil prices remain a critical risk factor for markets, with the conflict involving Iran continuing to disrupt energy supplies. Brent crude has traded above $100 a barrel, and the prospect of prolonged supply disruptions has kept inflation concerns elevated among investors.

Attention will now turn to the start of the third-quarter earnings season, where corporate results are expected to test whether elevated borrowing costs and energy prices are weighing on profit expectations.