Dow Jones futures tick higher as prospects for Fed rate cut strengthen

• Dow Jones futures climb as softer jobs data strengthen expectations for a Fed rate cut in September.
• CME FedWatch tool indicates a pricing of 92% of a 25-basis-point Fed rate cut in September, following August jobs data.
• Traders await upcoming inflation reports to gain fresh cues on Fed rate outlook.

Dow Jones futures rise 0.15% to trade above 45,500 during European hours on Monday, ahead of the United States (US) market open. Meanwhile, the S&P 500 futures gain 0.18% near 6,500, while Nasdaq 100 futures climb 0.31% to around 23,750.

US stock futures received support from the firming likelihood of the US Federal Reserve (Fed) rate cut in September, after disappointing labor market data for August. The CME FedWatch tool indicates a pricing in 90% of a 25-basis-point (bps) rate cut by the Fed at the September policy meeting, up from 86% a week ago, with rising bets on a potential 50 bps reduction this month.

The US Bureau of Labor Statistics (BLS) released, on Friday, the US Nonfarm Payrolls (NFP) data, which showed 22,000 new jobs added in August, falling short of the market expectations of 75,000. This figure followed the 79,000 increase (revised from 73,000) recorded in July. Meanwhile, the Unemployment Rate increased to 4.3% August, as expected, against the 4.2% prior.

On Friday's regular US session, US stocks closed lower as the weaker jobs data raised concerns about a slowing economy in the United States. The Dow Jones dropped 0.48%, the S&P 500 ended 0.32% lower, and the Nasdaq 100 inched lower by 0.03%.

Traders will likely observe upcoming inflation data for August, including the Producer Price Index (PPI) and Consumer Price Index (CPI), due on Wednesday and Thursday, respectively. These reports could impact the near-term path for the Fed's interest rate.