Apr 3 2024: U.S. stock index futures saw a slight decline on Wednesday, continuing a trend of weakening after a challenging start to the second quarter on Wall Street. Uncertainty surrounding the Federal Reserve’s stance on interest rate cuts and anticipation of crucial payroll data contributed to a cautious sentiment among investors.
At 05:50 ET (10:50 GMT), Dow Jones Futures dropped 12 points, or 0.1%, while S&P 500 Futures decreased by 8 points, or 0.2%, and Nasdaq 100 Futures declined by 60 points, or 0.3%.
Concerns About Rate Cuts
The recent sessions witnessed significant losses in the main Wall Street indexes, triggered by hawkish comments from top Fed officials. These comments led markets to reassess expectations of potential interest rate cuts by the central bank.
Despite a somewhat dovish tone during the March meeting, subsequent remarks from Fed officials highlighted concerns about persistent inflation and a robust labor market, which could delay any rate cuts.
Market Reaction and Economic Data
The PCE price index for February remained stable, while the upcoming nonfarm payrolls data for March, scheduled for release this Friday, is expected to reflect ongoing strength in the labor market. Consequently, traders revised their expectations for a 25 basis point rate cut in June, according to the CME Fedwatch tool.
The uncertainty surrounding higher interest rates prompted a retreat from near record highs in Wall Street indexes over the past two sessions.
Focus on Central Bank Speakers
Investors are closely monitoring a range of economic data, including the ADP private payrolls report and the ISM services index. However, attention is primarily on central bank speakers, particularly Federal Reserve Chair Jerome Powell.
Tech Sector and Oil Prices
Tech stocks experienced notable losses, influenced by rising Treasury yields and concerns about prolonged higher interest rates. Companies like NVIDIA Corporation, Intel, and Tesla saw declines in premarket trading.
Meanwhile, oil prices remained steady near five-month highs amid indications of reduced U.S. inventories and potential supply disruptions. OPEC+ is expected to maintain production levels, while geopolitical tensions in the Middle East added to supply concerns and contributed to oil’s recent surge in prices.
