Futures dip ahead of payrolls, business activity data

[April 03, 2020]  By Uday Sampath Kumar

(Reuters) - U.S. stock index futures retreated on Friday, with investors awaiting data on business activity and non-farm payrolls to get a clearer picture of the economic hit from the novel coronavirus.

Wall Street gained about 2% on Thursday as oil soared on hints of a Saudi-Russia deal, but doubts returned on whether the rebound would last as the health crisis crushes demand, sparking fears of corporate defaults and mass layoffs.

Walt Disney Co <DIS.N> said on Thursday it would furlough some U.S. employees this month, while sources said luxury retailer Neiman Marcus was stepping up preparations to seek bankruptcy protection.

"We view the consolidation today as a combination of some jitters ahead of the weekend, concerns about the extent of the global demand shock and questions regarding the quality of the health response in the United States," said Sebastien Galy, macro strategist at Nordea Asset Management in Luxembourg.

With global infections topping 1 million and more U.S. states implementing stay-at-home orders, economists have slashed their forecasts for U.S. real GDP. Morgan Stanley now expects U.S. real GDP to plunge 38% in the second quarter.

The S&P 500 <.SPX> has lost about a quarter of its value from an all-time high despite a brief lift provided by trillions of dollars in fiscal and monetary stimulus, and analysts foresee further declines heading into the quarterly earnings season.

At 07:04 a.m. EDT, Dow e-minis <1YMcv1> were down 203 points, or 0.95%, S&P 500 e-minis <EScv1> were down 21.25 points, or 0.84% and Nasdaq 100 e-minis <NQcv1> were down 64.25 points, or 0.84%.

The floor of the New York Stock Exchange. New York, U.S., March 20, 2020. REUTERS/Lucas Jackso

Data at 10 a.m. ET is expected to show a reading of ISM's services activity index dropping to 44.0 in March from 57.3 in February. A reading below 50 would indicate contraction in the sector, which accounts for more than two-thirds of U.S. economic activity.

All eyes will also be on the Labor Department's employment report that is expected to show the U.S. economy shed jobs in March, but it will likely not reflect the full extent of the layoffs as it covers data until March 12.

U.S. jobless claims blew past a record 6 million last week, doubling from 3 million in the previous week.

3M Co <MMM.N> fell 3.6% premarket, leading losses among Dow components <.DJI>, after U.S. President Donald Trump invoked the Defense Production Act to get the company to produce face masks and said it "will have a big price to pay".

Oil stocks looked set to extend gains from the previous session, with Chevron <CVX.N>, Exxon Mobil <XOM.N>, Diamondback Energy <FANG.O>, Apache <APA.N> and Occidental <OXY.N> rising between 1% and 12% on hopes of a huge global supply cut. [O/R]

Tesla Inc <TSLA.O> jumped 13% after the electric-car maker said production and deliveries of its Model Y sport utility vehicle were ahead of schedule, as it delivered the highest number of vehicles in any first quarter to date.

(Reporting by Uday Sampath in Bengaluru; Editing by Sagarika Jaisinghani and Arun Koyyur)

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