6:30am: Waiting for the data
Wall Street is expected to open down as markets continue to digest two days of testimony to Congress by Federal Reserve chair Jerome Powell, with a monthly jobs report and next week’s consumer inflation data likely to determine the extent of the Fed’s next interest rate hike.
Futures for the Dow Jones Industrial Average (DJIA) fell less than 0.1% in Thursday pre-market trading, while those for the broader S&P 500 index shed 0.2%, and contracts for the Nasdaq-100 declined 0.5%.
US stocks ended mixed on Wednesday after Powell softened his tone on the second day of his semi-annual monetary policy report to lawmakers. The DJIA closed 0.2% lower at 32,799, while the Nasdaq Composite added 0.4% to 11,576, and the S&P 500 gained 0.1% to 3,992. The small-cap Russell 2000 index fell 1 point to 1,877.
“After the sizeable losses on Tuesday, markets showed signs of stabilising over the last 24 hours as Fed chair Powell put forward a slightly softer message on the pace of future rate hikes,” commented Deutsche Bank strategist Jim Reid.
“He was appearing before the House Financial Services Committee, where he delivered almost exactly the same testimony as he had to the Senate Banking Committee the previous day,” he added. “However, there was one important caveat added, since when referring to his comments that ‘we would be prepared to increase the pace of rate hikes’, he said ‘I stress that no decision has been made on this’. So a clear message that faster rate hikes were not a done deal just yet.”
“Whilst Powell was trying to steer us away from a specific outcome, ultimately the decision was always going to depend significantly on tomorrow’s jobs report, as well as the CPI release on Tuesday,” Reid said.
The US jobs report, out on Friday, is expected to show non-farm payrolls increased by 205,000 in February after showing a massive gain of 517,000 jobs in January, according to economists polled by Reuters.