Futures trade lower ahead of data-packed week
7:46 am Tuesday, September 03rd, 2024
By Johann M Cherian
(Reuters) -U.S. stock index futures were lower on Tuesday ahead of a slew of economic data reports due through the week that could influence the extent of monetary policy easing by the Federal Reserve this year.
The blue-chip Dow and the benchmark S&P 500 recovered from early August’s losses and ended higher on Friday, notching their fourth-straight month in gains, after data pointed to a robust economy and moderating price pressures.
The Dow is at a record high and the S&P 500 is within 1% of its own milestone as markets enter into what has been a historically weak month for the main indexes on average.
Traders continue to scour for reassuring signs about the economy, with the release of the monthly ISM manufacturing survey due at 10 a.m. ET. Economists forecast the manufacturing index to rise to 47.5, but remain in contractionary territory.
A number of labor market numbers will also be parsed through the week, ahead of Friday’s non-farm payrolls figure for the previous month. The jobs market has come under greater scrutiny, after July’s report hinted at a greater-than-expected slowdown, that consequently sparked a global selloff in riskier assets.
The central bank’s meeting later in the month will be closely observed, following Chair Jerome Powell’s recent support for forthcoming policy adjustment. Odds of a 25-basis point interest rate cut are at 67%, according to the CME Group’s FedWatch Tool, while those for a bigger 50 bps reduction are at 33%.
“A very negative set of (labor market) figures could support expectations for a 50 bps rate move in two weeks’ time,” Achilleas Georgolopoulos, an investment analyst at XM, said.
“However, the Fed probably wishes to avoid scaring the market with such an aggressive first step considering that U.S. data on the whole remains quite satisfactory.”
At 07:06 a.m. ET, Dow E-minis were down 206 points, or 0.49%, S&P 500 E-minis were down 30.25 points, or 0.53%, Nasdaq 100 E-minis were down 147.25 points, or 0.75%.
Rate-sensitive chip stocks led premarket declines, with Nvidia down 2%, Broadcom dropping 1.4%, Advanced Micro Devices losing 1.1%, after the Philadelphia SE Semiconductor index’s 2.6% jump on Friday.
Among others, Tesla added 0.7%, after a report said it plans to produce a six-seat variant of its Model Y car in China from late 2025. Separately, the automaker’s sales in China logged their best month for the year so far in August.
Boeing lost 3.6% after brokerage Wells Fargo downgraded the planemaker to “underweight” from “equal weight”, while Unity climbed 5.4% after Morgan Stanley upgraded the software firm to “overweight” from “equal-weight”.
U.S. Steel dropped 5.9% after Democratic presidential candidate Kamala Harris expressed her concern about the steel firm being acquired by Japan’s Nippon Steel.
Southwest Airlines rose 2.5% after a report showed Elliott Investment now holds 10% of the company’s shares, allowing the hedge fund to call a special meeting at the carrier.
News Corp fell 4.7% after the media conglomerate’s arm REA Group offered to buy Britain’s largest property portal Rightmove.
(Reporting by Johann M Cherian in Bengaluru; Editing by Shounak Dasgupta)
