U.S. stock futures inch higher on last trading day of August as market steadies after selloff

U.S. stock index futures were slightly higher early Wednesday as markets looked to regain traction after the three days of selloff in the wake of Federal Reserve chair Jerome Powell’s speech at Jackson Hole last Friday.

What’s happening
  • S&P 500 futures

    rose 7 points, or 0.2% to 3995

  • Dow Jones Industrial Average futures

    added 46 points, or 0.2% to 31821

  • Nasdaq 100 futures

    climbed 47 points, or 0.4% to 12406

On Tuesday, the Dow Jones Industrial Average

fell 308 points, or 1%, while the S&P 500

and Nasdaq Composite

each dropped 1.1%. Through Tuesday’s close, the Dow was on track for a 1.5% August fall, while the S&P 500 was down 1.8% and the Nasdaq was off 2.1%.

What’s driving markets

Stock index futures indicated the bulls may just have the upper hand at the start of the last trading day of August on Wall Street.

Futures held on to gains after ADP estimated that private-sector employment rose by 132,000 in August, while annual pay rose 7.6%. Stocks were rattled on Tuesday after data showed a larger-than-expected number of job openings, underlining fears the Federal Reserve would be more aggressive in tightening monetary policy.

The S&P 500 index fell 5.1% in the previous three sessions, after a more hawkish than expected speech on Friday by Fed Chairman Jerome Powell raised fears that the central bank would persevere with higher interest rates to combat inflation even if it meant damaging the economy and hurting the stock market.

Traders will be wary, though, after Tuesday’s swoon.

“U.S. futures are again in the positive this morning, we saw yesterday that the winds could rapidly change direction, and the volatility is picking up,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank .

Indeed, the Cboe Volatility Index
a gauge of expected market volatility based on S&P 500 options, was above 26, having sat below its long term average of 20 less than two weeks ago. Also, the S&P 500 fell back through its 50-day moving average on Tuesday, raising concerns of additional downside for the market, in the short term at least.

The latest reversal came after better-than-forecast U.S. jobs and consumer confidence reports on Tuesday were seen allowing the Fed to fully prosecute its aggressive monetary tightening policy, a move that appeared to reinforce the market mantra that good economic news would be bad for stocks, and vice versa.

“We held a view over the past 2-3 months that ‘bad dataflow will start to be seen as good’, and believe this will likely continue to hold,” said Mislav Matejka, equity strategist at JP Morgan.

“For example, last week in the U.S. the very weak PMIs [purchasing managers indices] and weak housing dataflow were met by favorable equity trading on the day, lending support to this call,” he added.

A fresh batch of worldwide PMIs, due for release on Thursday, are just one feature within a busy few days of labor data that may thus provide meaningful market momentum.

Companies in focus
  • Shares of meme-stock favorite Bed Bath & Beyond Inc.

    plunged 26% in premarket trade after the struggling home-goods retailer’s strategic update, in which the company said it would cut its workforce and close stores, and provided a downbeat sales outlook.

How are other assets faring
  • U.S. crude futures

    fell 2.8% a barrel, adding to the previous session’s sharp losses which came amid fears slowing global growth would crimp demand.

  • The 10-year Treasury yield

    rose 0.8 basis point to 3.12.

  • The ICE U..S. Dollar index

    added 0.2% to 108.97, near a 20-year high, leaving gold

    down 0.7% at $1,723.50 an ounce.

  • Bitcoin

    advanced 2% to $20,211.

  • Asia and Europe markets were mostly softer after Wall Street’s overnight retreat. Hong Kong’s Hang Seng

    lost 0.2% and the Shanghai Composite

    fell 0.8% after data showed China’s manufacturing sector weakened. Europe’s Stoxx 600

    slipped 0.5%.

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