Dow Jones futures fall due to risk aversion, Fed outlook

• Dow Jones futures edge lower as traders adopt a cautious stance ahead of delayed data, including a pivotal jobs report.
• US index futures decline as risk aversion rises amid fading expectations for a Fed rate cut in December.
• Wall Street closed lower on Monday as sentiment toward AI stocks weakened ahead of Nvidia's earnings on Wednesday.

Dow Jones futures decline 0.30% to trade below 46,550 during European hours ahead of the opening of the United States (US) regular session on Tuesday. Moreover, the S&P 500 futures and Nasdaq 100 futures are down by 0.47% and 0.61%, with trading near 6,650 and 24,700, respectively, at the time of writing.

US index futures slip as traders turn cautious ahead of delayed economic releases, including a key jobs report due later this week. The data will offer fresh insight into the health of the US economy following the government shutdown.

Risk aversion increases amid declining US Federal Reserve (Fed) rate cut bets for December. The CME FedWatch Tool suggests that financial markets are now pricing in nearly a 49% chance that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, down from 67% probability that markets priced a week ago.

Federal Reserve Vice Chair Philip Jefferson noted Monday that risks to the labor market now outweigh upside risks to inflation, while stressing that the Fed should proceed "slowly" with any additional rate reductions.

Wall Street ended lower on Monday's regular session, with the Dow Jones sliding 1.18%, the S&P 500 falling 0.92%, and the Nasdaq 100 losing 0.83%. US equities came under pressure as sentiment toward the AI trade soured ahead of Nvidia's earnings due Wednesday. Investors are preparing to scrutinize the results amid concerns over stretched AI valuations, even though the chipmaker is widely expected to beat forecasts again. Earnings from Target and Walmart will also be eyed.