Futures Pointing To Continued Weakness On Wall Street
03 Abril 2024 - 10:06AM
IH Market News
The major U.S. index futures are currently pointing to a lower
open on Wednesday, with stocks likely to see further downside
following the steep drop seen in the previous session.
Concerns the Federal Reserve may hold off on lowering interest
rates may continue to weigh on the markets following the release of
more upbeat U.S. economic data.
Payroll processor ADP released a report this morning showing
stronger than expected private sector job growth in the U.S. in the
month of March.
ADP said private sector employment jumped by 184,000 jobs in
March after climbing by an upwardly revised 155,000 jobs in
February.
Economists had expected private sector employment to increase by
148,000 jobs compared to the addition of 140,000 jobs originally
reported for the previous month.
The report also said the annual rate of pay growth for
job-changers accelerated dramatically to 10.0 percent in March.
“Inflation has been cooling, but our data shows pay is heating
up in both goods and services,” said ADP chief economist Nela
Richardson.
Treasury yields have risen following the release of the data,
with the yield on the benchmark ten-year note seeing further upside
after ending Tuesday’s trading at a four-month closing high.
A steep drop by shares of Intel (NASDAQ:INTC) may also weigh on
Wall Street, as the semiconductor giant is plunging by 5.2 percent
in pre-market trading.
Intel is under pressure after disclosing a $7 billion operating
loss by its semiconductor manufacturing business in 2023, wider
than the $5.2 billion operating loss the year before.
Overall trading activity may be somewhat subdued, however, as
traders look ahead to remarks by Federal Reserve Chair Jerome
Powell this afternoon.
After moving sharply lower early in the session, stocks continue
to see considerable weakness throughout the trading day on Tuesday.
The Dow and the S&P 500 added to Monday’s losses, pulling back
further off the record closing highs set last Thursday.
The major averages ended the session off their worst levels of
the day but still firmly in the red. The Dow tumbled 396.61 points
or 1.0 percent to 39,170.24, the Nasdaq slumped 156.38 points or
1.0 percent to 16,240.45 and the S&P 500 slid 37.96 points or
0.7 percent to 5,205.81.
The early sell-off on Wall Street partly reflected renewed
uncertainty about the outlook for interest rates as traders
digested recent U.S. economic data.
Last Friday’s closely watched inflation data combined with
Monday’s stronger than expected manufacturing data have raised
questions about whether the Federal Reserve will lower rates in
June.
Treasury yields moved sharply higher in reaction to the data on
Monday and saw further upside during today’s session, with the
yield on the benchmark ten-year note reaching a four-month
high.
Traders may also have taken the opportunity to cash in on some
of the recent strength in the markets ahead of remarks by Fed Chair
Jerome Powell on Wednesday and the release of the monthly jobs
report on Friday.
On the U.S. economic front, the Commerce Department released a
report showing a significant rebound in factory orders in the month
of February.
The Commerce Department said factory orders surged by 1.4
percent in February after plunging by a revised 3.8 percent in
January.
Economists had expected factory orders to jump by 1.0 percent
compared to the 3.6 percent slump originally reported for the
previous month.
Networking stocks moved sharply lower over the course of the
session, resulting in a 2.7 percent nosedive by the NYE Arca
Networking Index.
Substantial weakness was also visible among housing stocks, with
the Philadelphia Housing Sector Index plunging by 2.5 percent. The
index pulled back further off last Thursday’s record closing
high.
Airline stocks also showed a significant move to the downside on
the day, dragging the NYSE Arca Airline Index down by 1.8
percent.
Healthcare, computer hardware and semiconductor stocks also saw
considerable weakness, while energy stocks bucked the downtrend
amid a sharp increase by the price of crude oil.
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