Dow Jones futures edge higher, likely on growing expectations of Fed rate cuts

• Dow Jones futures gain ground on rising odds of further rate cuts by the Federal Reserve.
• Traders may adopt caution amid concerns over a possible US government shutdown.
• Nvidia's $100 billion deal with OpenAI has sparked concerns over the longevity of the AI infrastructure boom.

Dow Jones futures rise 0.35% to trade above 46,700 during European hours on Monday, ahead of the United States (US) regular markets opening. Meanwhile, the S&P 500 futures climb 0.41% to move above 6,700, while Nasdaq 100 futures surge 0.52% to trade near 24,850.

US index futures advance over the rising likelihood of the US Federal Reserve (Fed) delivering another interest rate cut in October. The CME FedWatch Tool suggests that markets are now pricing in nearly an 88% chance of a Fed rate cut in October and a 65% possibility of another reduction in December.

Traders may adopt caution on concerns over the possible shutdown of the United States (US) government. US President Donald Trump is scheduled to meet congressional leaders at the White House on Monday in a last attempt to avoid a government shutdown, with federal funding set to expire Tuesday night. The shutdown could begin on October 1 in the case of no deal.

President Trump increased market uncertainty by sharing plans to impose a 100% tariff on imports of branded or patented pharmaceutical products from October 1, unless a pharmaceutical company is building a manufacturing plant in the US. Trump also unveiled tariffs of 50% on kitchen cabinets and bathroom vanities and 25% on trucks.

Nvidia's $100 billion partnership with OpenAI has raised doubts about the sustainability of the AI infrastructure boom. Despite being private and losing billions in cash, OpenAI's aggressive dealmaking has helped propel markets to record highs. The $500 billion AI startup has struck massive agreements with Nvidia, Oracle, CoreWeave, and others.