Futures mixed as payrolls data eyed for policy cues

[December 07, 2023]  By Amruta Khandekar and Shristi Achar A

(Reuters) - Futures tracking the Dow and the S&P 500 indexes were subdued on Thursday as caution prevailed ahead of the monthly payrolls data due later in the week, while Nasdaq futures were propped up by a rise in Google shares.

Reports showing weak private payrolls and job openings this week have reinforced expectations the Federal Reserve's furious pace of rate hikes is slowing the economy, potentially allowing the central bank to ease up on its monetary policy next year.

Traders have nearly fully priced in the likelihood of the Fed keeping interest rates unchanged at its meeting next week, with 61% betting on a rate cut as soon as March 2024, according to the CME Group's FedWatch tool.

However, some analysts have warned that markets have been too optimistic about rate cuts and also said the upcoming jobs report will be crucial in determining the chances of a soft landing - where the Fed manages to avert a recession.

"U.S. jobs numbers tomorrow and central bank meetings next week could inform the market if it has got carried away with the level of rate cuts which are now being priced in for 2024," Russ Mould, investment director at AJ Bell, wrote in a note.

The Labor Department's report is expected to show non-farm payrolls increased by 180,000 jobs last month after rising by 150,000 in October.

Another report due at 8:30 a.m. ET is expected to show initial jobless claims ticked up to 222,000 for the week ended Dec. 2, compared with 218,000 in the prior week.

Meanwhile, comments from Bank of Japan Governor Kazuo Ueda added to growing speculation that the central bank could soon shift away from its ultra-easy monetary policy.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 27, 2023. REUTERS/Brendan McDermid/File Photo

At 7:02 a.m. ET, Dow e-minis were down 75 points, or 0.21%, S&P 500 e-minis were down 0.25 points, or 0.01%, and Nasdaq 100 e-minis were up 30 points, or 0.19%.

Shares of Google-parent Alphabet were up 2.9% in premarket trading, a day after the release of its most advanced artificial intelligence model. Other megacap stocks were mixed.

Among other major movers, Advanced Micro Devices gained 2.2% before the bell, a day after the chipmaker estimated there was a $45 billion market for its data center artificial intelligence processors this year.

GameStop tumbled 7.3% after the videogame retailer missed estimates for quarterly revenue, hurt by rising competition.

Bristol-Myers Squibb added 1.2% after the drugmaker announced an additional $3 billion share buyback program.

(Reporting by Amruta Khandekar and Shristi Achar A; Editing by Saumyadeb Chakrabarty and Anil D'Silva)

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