Futures subdued ahead of jobs data, Treasury yields surge
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[October 04, 2023] By
Ankika Biswas and Shashwat Chauhan
(Reuters) -Futures tracking Wall Street's main indexes were muted on
Wednesday as investors awaited more data for clues on the state of the
labor market, while a relentless rally in long-term U.S. Treasury yields
kept markets on edge.
Adding to investor anxiety was the ouster of Speaker Kevin McCarthy by
some Republicans in the House of Representatives just days after the
government narrowly averted a shutdown.
While the 30-year Treasury yield crossed above 5% for the first time
since August 2007, the 10-year and five-year yields hit their highest
since 2007.
Megacap growth stocks including Microsoft, Meta Platforms, Nvidia and
Tesla were down about 0.2% each in premarket trading, with Apple
shedding 0.9% following a KeyBanc downgrade to "sector weight" from
"overweight".
At 7:06 a.m. ET, Dow e-minis were up 9 points, or 0.03%, S&P 500 e-minis
were up 0.5 point, or 0.01%, and Nasdaq 100 e-minis were down 5 points,
or 0.03%.
The CBOE volatility index, Wall Street's "fear gauge", briefly hit a
five-month high and topped its long-term average of 20.
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A day after U.S. job openings unexpectedly rose in August, investors
will closely monitor September ADP National Employment data at 8:15 a.m.
ET and non-farm payrolls data on Friday for more clues about a fairly
resilient labor market.
"Markets had become overly confident in pricing a rapid easing of the
Federal Reserve's monetary policy," said UBS Global Wealth Management's
Chief Investment Officer Mark Haefele, who expects near-term choppy and
range-bound trading in equity markets.
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Traders work on the floor of the New York Stock Exchange (NYSE) in
New York City, U.S., September 26, 2023. REUTERS/Brendan McDermid/File
Photo
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On the political front, Haefele noted, "Absent a new House speaker,
no action can be taken on bills, from routine matters to the funding
of the federal government ... increasing the risk of a government
shutdown in late November."
The Institute for Supply Management's non-manufacturing Purchasing
Managers' Index, S&P Global's final composite and services PMI
surveys, factory orders and remarks by Fed policymakers including
Chicago President Austan Goolsbee and Board Governor Michelle Bowman
will also be monitored during the day.
Traders' bets of at least another 25-basis point interest rate hike
in November and December stood at 29% and 44%, respectively,
according to CME's FedWatch tool.
All three major U.S. stock indexes ended more than 1% lower on
Tuesday, with the Dow turning negative on a year-to-date basis for
the first time since June.
Chipmaker Intel gained 1.9% on Wednesday on plans to operate its
programmable chip unit as a standalone business and hold a public
offering for stock in the business over the next two to three years.
Eli Lilly said the head of its diabetes and obesity division, Mike
Mason, will retire by the end of the year. The drugmaker's shares
fell 1%.
(Reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru;
Editing by Shounak Dasgupta)
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