- Key Jobs report shows strong hiring pace in March
- First Republic slips as bank suspends preferred stock dividend
- semiconductor stocks rise; Samsung plans to throttle chip production
- Futures mixed: Dow up 0.09%, S&P flat, Nasdaq down 0.13%
April 10 (Reuters) – US stock index futures were muted on Monday as risks grew that the Federal Reserve will hike interest rates further after Friday’s jobs data highlighted a still-strong job market.
Nasdaq 100 futures were slightly lower, with growth stocks including Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Microsoft Corp (MSFT.O) falling in premarket trading.
US employers maintained a strong pace of hiring in March, data showed Friday, pushing the unemployment rate down to 3.5% and raising the likelihood of the Fed raising rates again next month.
While nonfarm payrolls rose 236,000 jobs last month, slightly weaker than economists had expected, investors focused on the overall data signaling resilience in the job market.
“We see a disconnect between markets embracing much simpler Fed policy on ‘softer’ data and how the Fed will actually view the data,” Citi economists said.
“High inflation and a still-strong job market should not only make cuts unlikely, but we also see persistently too-high inflation, including a 0.5%m/m increase in core CPI this week, leading to further hikes becomes.”
A slew of reports over the past week, including weak home payrolls and job vacancies data, pointed to a slowdown in labor demand and raised hopes that the Fed will suspend market-punishing rate hikes amid the recent turmoil in the banking sector.
Trader bets on a 25 basis point rate hike by the Fed in May have risen to over 65% from 57% last week, according to CME Group’s Fedwatch tool.
While US stock markets were closed on Good Friday, Treasury yields rose following the data, with the two-year yield, which normally moves in step with interest rate expectations, jumping to 3.99% on Friday. Most recently it was 3.94%.
This week’s focus will be on US consumer and producer price data, minutes from the March Fed meeting and quarterly results from major US banks such as JPMorgan Chase & Co (JPM.N), Citigroup Inc (CN) and Wells Fargo & Co (WFC ) relocate .N).
Analysts are expecting first-quarter earnings for S&P 500 companies to shrink 5.2%, according to estimates from Refinitiv IBES, a reversal of 1.4% growth forecast earlier in the year.
At 6:48 a.m. ET, the Dow e-minis are up 29 points, or 0.09%, the S&P 500 e-minis are up 1.25 points, or 0.03%, and the Nasdaq 100 e-minis are up 17.25 points, or 0.13%.
Shares in First Republic Bank (FRC.N) fell 2% as the lender said on Friday it plans to suspend payment of quarterly cash dividends on its preferred shares “as a measure of prudent oversight.”
Regional bank stocks were mixed after Friday’s Fed data showed that deposits at US commercial banks rose in late March for the first time in about a month, showing signs of stabilizing after recent bank failures have rattled the banking system and the have unsettled depositors.
Western Alliance Bancorp (WAL.N) and PacWest Bancorp (PACW.O) declined 1.2% and 0.5%, respectively, while Comerica Inc rose 0.9%.
Pioneer Natural Resources Co (PXD.N) rose 7.4% after it was revealed that Exxon Mobil Corp (XOM.N) was in preliminary talks with the company over a potential acquisition of the shale oil producer.
Semiconductor stocks Micron Technology Inc (MU.O) and Western Digital Corp (WDC.O) gained 6.6% and 5.3% respectively after Samsung Electronics Co Ltd (005930.KS) plans to cut chip production.
Reporting by Sruthi Shankar and Ankika Biswas in Bengaluru; Additional reporting by Medha Singh; Edited by Varun HK and Shounak Dasgupta
Our standards: The Thomson Reuters Trust Principles.
Comments are closed.