Futures inch up after Wall St selloff, labor data on tap
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[March 08, 2023] By
Sruthi Shankar and Bansari Mayur Kamdar
(Reuters) -U.S. stock index futures edged higher on Wednesday after
hawkish comments from Federal Reserve Chair Jerome Powell fueled a
selloff on Wall Street a day earlier, stoking concerns about a sharp
recession and putting focus on the upcoming labor market data.
The main U.S. stock indexes fell more than 1% on Tuesday, with the
benchmark S&P 500 logging its biggest percentage decline in two weeks,
after Powell told U.S. lawmakers the Fed will likely need to raise
interest rates more than expected as it seeks to tame inflation.
Traders drastically increased their bets that the U.S. central bank will
raise rates by 50 basis points later this month, with money market
futures pricing in a 64.1% chance of such a move.
BlackRock's chief investment officer of global fixed income, Rick Rieder,
said the Fed could raise rates to 6% and keep them there for an extended
period of time to fight inflation. Traders currently see the Fed funds
rate peaking at 5.64% by September.
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Meanwhile, a closely watched part of the U.S. Treasury yield curve saw
its deepest inversion in more than 40 years on Tuesday. Such an
inversion is seen as a reliable recession indicator. [US/]
"We're now expecting three fresh rate rises, and expectation is also
growing that there could be a half a percent hike just at the March
meeting," said Susannah Streeter, senior investment and markets analyst
at Hargreaves Lansdown.
"It'll apply more pressure on companies and consumers and worries are
increasing that the U.S. economy won't fall like a feather into a mild
downturn, but will slam into a recession."
Powell will testify again before the House Financial Services Committee
at 10:00 a.m. ET.
Investors will closely watch February private payrolls numbers and job
openings data for January later in the day for clues on the state of the
labor market after surprisingly strong January jobs data raised worries
that the Fed could keep interest rates higher for an extended period.
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Traders work on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., March 7, 2023.
REUTERS/Brendan McDermid
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The ADP report at 08:15 a.m. ET (1315 GMT) is expected to show
private employers hired 200,000 workers in February after adding
106,000 jobs in January.
Another set of numbers at 10:00 a.m. ET is likely to show U.S. job
openings increased to 10.5 million in January after an unexpected
rise to 11 million in the previous month.
At 06:52 a.m. ET, Dow e-minis were up 34 points, or 0.1%, S&P 500
e-minis were up 5 points, or 0.13%, and Nasdaq 100 e-minis were up
26.5 points, or 0.22%.
Among stocks, Tesla Inc slipped 0.6% in premarket trading after
Berenberg downgraded the stock to "hold" and data showed China's
passenger vehicle sales fell 20% in the first two months of this
year.
Snapchat operator Snap Inc added 0.5% and looked set to extend gains
for a fourth straight day as the White House backed legislation to
give the administration new powers to ban Chinese-owned video app
TikTok and other foreign-based technologies.
Occidental Petroleum Corp gained 3.1% after Warren Buffett's
Berkshire Hathaway Inc increased its stake in the oil company to
about 22.2%.
WeWork Inc climbed 7.9% after the New York Times reported the
flexible workspace provider was in talks to restructure its
outstanding debt of more than $3 billion and raise more cash.
(Reporting by Sruthi Shankar in Bengaluru, additional reporting by
Amruta KhandekarEditing by Vinay Dwivedi)
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