LDN - Business

Futures slip on rate hike jitters ahead of key jobs report

[March 09, 2023] By Amruta Khandekar and Shristi Achar A

(Reuters) -U.S. stock index futures fell on Thursday as a tight labor market and Federal Reserve Chair Jerome Powell's remarks fueled worries about sharp interest rate hikes, while investors awaited a key jobs report that could determine the Fed's policy path.

With economic data so far suggesting the labor market remains hot despite the Fed's aggressive monetary tightening over the past year, investors are now focused on the February non-farm payrolls report due on Friday.

The reading is expected to show payrolls increased by 205,000 last month, according to economists polled by Reuters, after January's blowout 517,000 figure, which had first led markets to reprice their expectations for U.S. interest rates.

"Investors have digested Chair Powell's testimony and are now preparing for the jobs number that's coming out tomorrow," said Peter Andersen, founder of Andersen Capital Management.

"I expect to see volatility maybe throughout the first half of this year until investors have a clearer sense of where Chair Powell is on raising rates."

Before the payrolls data, a separate report from the Labor Department due at 8:30 am ET on Thursday is expected to show an uptick in initial claims for state unemployment benefits for the week ended March 4.

Wall Street's main indexes ended mixed on Wednesday, with the benchmark S&P 500 eking out marginal gains after Powell reaffirmed his message of likely sharper interest rate hikes, but emphasized that the decision hinged on economic data before the central bank's March meeting.

[to top of second column]

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 2, 2023. REUTERS/Brendan McDermid

Powell's two-day testimony has led markets, which until recently had been expecting a 25-basis-point rate hike, to dramatically increase their bets for a larger 50 bps increase by the Fed in March, with rates now seen peaking at 5.65% by September.

Nasdaq futures led declines on Thursday, with shares of Tesla Inc down 2.8% in premarket trade and set to extend losses from the previous session on news of a probe by the U.S. auto safety regulator.

At 7:08 a.m. ET, Dow e-minis were down 21 points, or 0.06%, S&P 500 e-minis were down 11 points, or 0.28%, and Nasdaq 100 e-minis were down 66.75 points, or 0.55%.

Silvergate Capital Corp plunged 48.9% after the crypto-focused bank said late on Wednesday it was planning to wind down operations and liquidate voluntarily. Peer Signature Bank's shares also fell 7.6%.

Shares of SVB Financial Group slumped 29.4% as the startup-focused lender slashed its 2023 outlook and announced a $1.75 billion share sale to shore up its balance sheet.

Etsy Inc slid 6.1% after brokerage Jefferies downgraded the consumer ecommerce platform to "underperform" from "buy" on deteriorating buyer trends.

(Reporting by Amruta Khandekar and Shristi Achar A in Bengaluru, additional reporting by Medha SinghEditing by Vinay Dwivedi)

Back to top