- US stock futures edged lower ahead of Tuesday's opening bell.
- Traders reacted to factory data showing activity expanding for the first time since September 2022.
- There's now a 40% chance the Fed holds rates at their current level until June, per the CME Group.
US stock futures slipped in Tuesday's premarket as strong factory data caused traders to scale back their expectations for a June interest-rate cut.
The benchmark S&P 500 looked set to drop about 0.1% at the opening bell, while futures for the Nasdaq 100 and Dow Jones Industrial Average were in the red as of 5 a.m. ET.
Hotter-than-expected ISM manufacturing index data, which showed activity expanding for the first time since September 2022, sparked the sell-off.
When the US economy looks strong, there's less cause for the Federal Reserve to cut interest rates. After Monday's factory data, traders think there's now a 40% chance the central bank will opt to hold borrowing costs at their current level through June, the CME Fedwatch tool showed.
"Stronger manufacturing ISM data reignited doubts over the extent of Fed rate cuts this year," Deutsche Bank's Jim Reid said in a research note.
Meanwhile, yields on 10-year US Treasury notes held steady after jumping by more than 10 basis points on Monday.
In London the blue-chip FTSE 100 rose 0.35% to 7,980 points.
