LDN - Business

Futures ease as health insurers slide, focus on data and Fed speakers

[April 02, 2024] By Sruthi Shankar and Shashwat Chauhan

(Reuters) -U.S. stock index futures slipped on Tuesday, hurt by sharp losses in shares of health insurers, while investors awaited more economic data and comments from Federal Reserve officials for hints on the timing of interest rate cuts.

Shares of UnitedHealth, CVS Health and Humana fell between 3.9% and 9.0% in premarket trading as the U.S. government's unchanged reimbursement rates for providers of Medicare Advantage health plans signaled that insurers' margins would likely remain under pressure next year.

The blue-chip Dow and the benchmark S&P 500 closed lower on Monday after stronger-than-expected manufacturing data raised doubts over the Fed's three interest rate cuts that it had outlined at the last policy meeting.

Data expected on Tuesday includes factory orders and job openings in February. However, the main focus is on Friday's U.S. non-farm payrolls data, which is expected to show job additions slowed in March although average earnings ticked higher compared to the previous month.

"Markets will be looking for a figure that is neither too hot as an overheated market might postpone rate cuts, or too cold as disappointing data would increase speculation of a hard economic landing," said Russ Mould, investment director at AJ Bell.

Traders are pricing in a near 59% chance of the Fed cutting interest rates by at least 25 basis points in June, as well as see two more cuts in 2024, as per CMEGroup's FedWatch tool.

A host of Fed officials including New York Fed President John Williams, Cleveland Fed President Loretta Mester and San Francisco President Mary Daly are scheduled to speak later in the day.

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The Nasdaq Market site is seen on the day that shares of Truth Social and Trump Media & Technology Group start trading under the ticker "DJT", outside the Nasdaq Market site in New York City, U.S., March 26, 2024. REUTERS/Brendan McDermid/File Photo

At 7:10 a.m. ET, Dow e-minis were down 143 points, or 0.36%, S&P 500 e-minis were down 12.5 points, or 0.24%, and Nasdaq 100 e-minis were down 60.5 points, or 0.33%.

The subdued start to the new quarter comes on the heels of the S&P 500's strongest first quarter in five years and all the three major indexes hitting record highs, helped by optimism around artificial intelligence and expectations of easing monetary policy.

Most megacap growth stocks were trading lower, with Tesla leading losses, down 1.5% ahead of the release of its first-quarter delivery numbers.

Among other stocks, Calvin Klein-parent PVH Corp's shares tumbled 22.0% after the retailer forecast an about 11% drop in first-quarter revenue. Peer Ralph Lauren also lost 2.7%.

Cryptocurrency and blockchain-related stocks dropped, tracking an over 5% fall in bitcoin. Exchange operator Coinbase Global, software firm MicroStrategy and crypto miners Riot Platforms fell between 3.3% and 7.3%.

Estee Lauder gained 2.1% after Citigroup upgraded the cosmetics giant's rating to "buy" from "neutral".

(Reporting by Sruthi Shankar and Shashwat Chauhan in Bengaluru; Editing by Shinjini Ganguli)

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