US stock futures fell with investors on edge as Israel and Iran continued to trade strikes against a backdrop of shifting US trade policy and stubborn interest rates.

Stock futures were staging an early comeback Monday after sharp declines on Friday. As the conflict between Israel and Iran shows no signs of cooling, any recovery in stocks will likely be fragile. Over the weekend,

Futures on Wall Street have declined on Tuesday morning Indian time after an uneasily positive session to start the truncated week. The Dow futures are currently down 165 points, while the S&P 500 and Nasdaq futures are down 30 and 110 points respectively.

Money market moves show traders are pricing in about 48 basis points of rate cuts by the end of 2025, with a 55% chance of a 25-bps rate cut in September, according to CME Group's Fedwatch tool.

Investors await the Bank of Japan’s policy verdict, with the BOJ expected to stand pat on interest rates at 0.5% in the face of an uncertain trade climate.