US stock futures retreated on Monday as investors overhauled their views on interest-rate cuts after a blowout jobs report, ahead of a week of key inflation data and the start of earnings season.
Dow Jones Industrial Average futures (YM=F) fell 0.4% after notching a fresh record high as stocks soared to close the week. S&P 500 futures (ES=F) shed roughly 0.5%, while contracts on the tech-heavy Nasdaq 100 (NQ=F) led the losses with a 0.6% drop.
Hopes for an outsized rate cut from the Federal Reserve have melted away after a better-than-expected September jobs report dispelled concerns about cracks in the labor market. The benchmark 10-year Treasury yield (^TNX) hit 4% for the first time since August amid doubts about the Fed's next move.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Traders have abandoned last week's bets on a 0.50% rate cut in November and now see an 88% chance of a 0.25% move, according to the CME FedWatch Tool. Those expectations could drag on stocks, which have rallied to records amid confidence that big rate cuts and an economic "soft landing" were on the table.
The wait is now on for the October consumer inflation report due Thursday to provide fresh insight into whether the Fed is making progress on bringing already-cooling price pressures down to its 2% target.
The start of third-quarter earnings is in focus as Goldman Sachs (GS) raised its target for the S&P 500 (^GSPC), saying it expects higher margin growth for corporate companies. After Pepsi (PEP) results on Thursday, the season gets underway in earnest on Friday with reports from big banks JPMorgan (JPM), Wells Fargo (WFC), and BlackRock (BLK).