U.S. futures turn higher as fresh labor market data looms

U.S. futures turn higher as fresh labor market data looms

Investing.com– U.S. stock futures turned higher in choppy trading on Wednesday, erasing earlier gains but not straying too far from the flatline, as investors gauged a surge in bond yields and looked ahead to fresh labor market data. At 07:25 ET (11:25 GMT), the Dow futures contract edged up by 41 points or 0.1%, S&P 500 futures added 6 points or 0.1%, and Nasdaq 100 futures gained 21 points or 0.1%. All of the main indices on Wall Street slumped by more than 1% on Tuesday after stronger-than-anticipated job openings data sent U.S. bond yields soaring, weighing on equity valuations.

Yields typically move inversely to prices. The 30-stock Dow Jones Industrial Average posted its worst day since March and the benchmark S&P 500 touched its lowest mark since June. The biggest daily decrease came in the tech-heavy Nasdaq Composite, which fell by 1.9%. Following the losses, the Dow is now in negative territory this year. However, the S&P 500 and Nasdaq are still up by 10% and 24%, respectively, in 2023, thanks in part to an artificial intelligence-powered surge in tech stocks earlier in the year. Bond market turmoil The recent spike in U.S. Treasury yields took its toll on global bond markets on Wednesday, as traders came around to the idea that interest rates may stay stubbornly elevated for some time. By 07:33 ET, the benchmark 10-year U.S. Treasury yield had edged down by 0.01 percentage points to 4.79%, just under its highest level since mid-2007. The 30-year yield fell by 0.03 percentage points to 4.91%, but remained close to a mark last seen before the financial crisis.

The jump in U.S. yields was felt in Germany, where the country’s key 10-year government debt yield climbed to its highest point since 2011. Japan’s central bank also announced that it made unscheduled bond purchases, as yields on government debt spiked and authorities flagged that they were watching market movements with urgency. The U.S. dollar index, which tracks the greenback against a basket of other currencies, has been boosted by the jump in yields to near 11-month highs, although it did slip on Wednesday. Labor market data looms Attention is turning to the release of U.S. labor market figures over the rest of the week, with private payrolls data due out on Wednesday and the crucial jobs report set to be published on Friday. Economists expect the ADP National Employment report to show that private payrolls increased by 153,000 in September, down from 177,000 in August. This decline may indicate that the job market in the world’s largest economy is beginning to weaken, a trend that could relieve upward pressure on wages and subsequently help cool inflation.

However, the recently growing narrative of a slowing labor market in the U.S. was dented by data on Tuesday showing that job vacancies — often viewed as a proxy of demand for workers — unexpectedly rose in August. The number bolstered bets that the Federal Reserve will choose to keep interest rates higher for a longer period of time. The all-important monthly nonfarm payrolls report at the end of the trading week will likely flesh out the jobs picture. The U.S. economy is expected to have added 163,000 roles last month, slipping from 187,000 in August. Cal-Maine slumps In corporate news, shares in Cal-Maine Foods (NASDAQ:CALM) fell sharply in U.S. premarket trading after the egg producer reported first-quarter earnings per share of $0.02 versus analysts’ estimates of $0.33. Revenues of $459.3 million missed projections of $473.37 million, primarily due to the decrease in the net average selling price for conventional eggs. Elsewhere, Palantir (NYSE:PLTR) shares jumped after Bloomberg News reported that the data analysis group is poised to secure a contract to overhaul the UK’s National Health Service, while Apple (NASDAQ:AAPL) stock slipped after analysts at KeyBanc Capital Markets downgraded their rating of the iPhone maker.

Oil drops amid U.S. dollar strength Oil prices dipped on Wednesday as the jump in the U.S. dollar threatened to make crude more expensive for buyers using foreign currency, potentially hitting demand. By 07:27 ET, the U.S. crude futures traded 1.9% lower at $87.50 a barrel, while the Brent contract dropped 1.8% to $89.28. The measures had ended the prior session slightly higher, recovering somewhat from three-week lows, as a persistently tight supply outlook partly offset demand worries. Traders will be monitoring a meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, on Wednesday. Saudi Arabia and Russia, two major members of the producer group, decided last month to extend output reductions until the end of the year.

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