Futures muted with all eyes on jobs data amid recession fears

[April 06, 2023]  By Ankika Biswas and Amruta Khandekar

(Reuters) - U.S. stock index futures were subdued on Thursday ahead of a key jobs reading that will be used by investors to assess the fallout of the Federal Reserve's interest rate hikes on economic growth.

Weak data on the labor market and business activity this week have fueled hopes of a pause in rate hikes even though equities have been pressured by recession worries after the recent turmoil in the banking sector.

This marks a change from recent months when risk sentiment had increased due to softer economic data, which raised hopes of a halt to rising borrowing costs by the Fed.

"There appears to be a feeling that markets want to believe that the economy is slowing, which it probably is, and that recent rate rises are to blame and the Fed will need to reverse course soon when it comes to rate policy," said Michael Hewson, chief market analyst at CMC Markets UK.

Fed fund futures are indicating a 53.6% chance of the U.S. central bank pausing its rate hikes in May and a 46.4% chance of a rate cut at its July meeting, according to CME Group's Fedwatch tool.

At 7:05 a.m. ET, Dow e-minis were up 13 points, or 0.04%, S&P 500 e-minis were down 0.25 points, or 0.01%, and Nasdaq 100 e-minis were down 30.75 points, or 0.24%.

Major technology and growth shares such as those of Apple Inc, Tesla Inc and Nvidia Corp fell between 0.1% and 0.7% in premarket trade.

Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., March 31, 2023. REUTERS/Andrew Kelly

Bucking the trend, Alphabet Inc rose 1.1% after Google Chief Executive Sundar Pichai said the company plans to add conversational artificial intelligence features to its search engine, according to a report.

The benchmark S&P 500 and the tech-heavy Nasdaq are on track to notch weekly declines for the first time in four weeks.

The U.S. stock market will be shut on Friday for the Good Friday holiday.

A Labor Department report on initial claims for state unemployment benefits last week is expected to show an increase to 200,000 from the prior period. The much-awaited non-farm payrolls report for March will be released on Friday.

Remarks by St. Louis President James Bullard on the economy and monetary policy, later in the day, will also be parsed for clues on the Fed's policy.

A slew of major U.S. banks will kick off the first-quarter earnings season next week, providing investors more insight into the health of corporate America.

Among major stock moves, AMC Entertainment Holdings Inc jumped 11.4% after a U.S. court denied the theater operator's request to lift a status quo order necessary for its stock conversion plan.

(Reporting by Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Anil D'Silva and Arun Koyyur)

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