Market Snapshot: U.S. stock futures dip as attention turns to Friday’s jobs report


U.S. stock futures fell back Thursday as worries about further Fed tightening dampened sentiment.

How are stock-index futures
  • S&P 500 futures ES00, -0.19% dipped 14 points, or 0.4%, to 3979
  • Dow Jones Industrial Average futures YM00, -0.02% fell 75 points, or 0.2%, to 32738
  • Nasdaq 100 futures NQ00, -0.49% eased 81 points, or 0.7%, to 12147

On Wednesday, the Dow Jones Industrial Average DJIA, -0.18% fell 58 points, or 0.18%, to 32798, the S&P 500 SPX, +0.14% increased 6 points, or 0.14%, to 3992, and the Nasdaq Composite COMP, +0.40% gained 46 points, or 0.4%, to 11576.

What’s driving markets

Concerns that higher interest rates to combat inflation will cause an economic contraction continued to damp risk appetite.

“This morning the low energy in U.S. equity futures continues and it feels like the equity market is back at the wait-and-see mode on inflation and the economy. As we have said before, it is the bond market that will dictate where equities go from here,” said Peter Ganry, head of equity strategy at Saxo Bank.

“If S&P 500 futures slips below Tuesday’s close, then the 3,950 level is the next level to watch and the approximate area for the 200-day moving average,” Ganry added.

Two-year Treasury yields TMUBMUSD02Y, 5.032% remained near 15-year highs after Federal Reserve Chair Jerome Powell in recent sessions delivered comments to Congress generally deemed more hawkish than expected.

“While Powell softened things a little [on Wednesday] by saying nothing is decided yet, the clear message is future rate decisions will be dependent on the data and for now that seems to be tilting things more towards a 50-basis point rather than 25 basis point rate rise later this month,” said Russ Mould, investment director at AJ Bell.

“This would shatter the market’s comfortable illusion at the start of the year that rates were about to pivot and a soft landing for the U.S. economy could be engineered,” Mould added.

Powell and his colleagues have made it clear that inflation still running at more than three times the Fed’s 2% target is unlikely to be sufficiently suppressed if the U.S. labor market remains strong.

The JOLTS survey of job openings published on Wednesday suggests there remain two positions available for every one person registered as unemployed. With this in mind, traders will be keenly eyeing the official nonfarm payrolls report on Friday for evidence of whether such a robust jobs market is adding to wage inflation.

U.S. economic updates set for release on Thursday include the weekly jobless claims report at 8:30 a.m. Fed Vice Chair for Supervision Michael Barr is due to speak about crypto, just a day after Silvergate Capital SI, -5.76% said it would voluntarily liquidate its bank.

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