Futures rise as solid China data offsets rate jitters

[March 01, 2023]  (Reuters) -U.S. stock index futures rose on Wednesday, putting Wall Street on course for a positive start to March, as strong manufacturing data from China outweighed concerns about the Federal Reserve's tighter monetary policy.

Asian and European stocks rose after data showed China's manufacturing activity expanded at the fastest pace in more than a decade, infusing optimism in gloomy global markets.

"A recovery in the world's second-largest economy could feed into the 'soft landing' or 'even no landing' narrative which has done much to stoke the move in risk assets since the October lows," said Russ Mould, investment director at AJ Bell.

The main U.S. stock indexes ended February with declines as investors braced for the possibility that the Fed will hike rates more than initially thought, on signs of resilience in the economy.

Traders are pricing in expectations that the Fed will raise rates in coming months to a 5.25%-5.50% range, from the current 4.50%-4.75% range. That's higher than where Fed policymakers in December signaled they would need to raise the policy rate.

U.S. monthly payrolls and consumer prices reports in the coming days will further help investors gauge the path of interest rates ahead of the Fed's March 21-22 meeting.

Money market traders see an about 80% chance of a 25-basis-point rate hike later this month, but the odds of a bigger 50 bps rate hike have grown recently.

At 7:25 a.m. ET, Dow e-minis were up 56 points, or 0.17%, S&P 500 e-minis were up 9 points, or 0.23%, and Nasdaq 100 e-minis were up 44.75 points, or 0.37%.

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

The Institute for Supply Management's factory activity data for February is due at 10:00 a.m. ET. Minneapolis Fed President Neel Kashkari, a voter in the rate-setting committee in 2023, will speak before the opening bell.

Novavax Inc slumped 25.3% in premarket trading after the COVID-19 vaccine maker raised doubts about its ability to remain in business and announced plans to slash spending as it prepares for a fall vaccination campaign.

AMC Entertainment Holdings Inc slid 8.5% after the theatre chain posted a more than 15% fall in fourth-quarter revenue.

Kohl's Corp fell 7.8% as the retailer forecast full-year profit below analysts' estimates due to weak demand for clothing and accessories.

Tesla Inc rose 0.8% ahead of its investor day event. The electric automaker is readying a production revamp of its top-selling Model Y, Reuters reported, citing people familiar with the plan.

(Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur)

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