Futures tracking the S&P 500 and Nasdaq were largely subdued on Thursday as investors awaited more U.S. economic data for cues on the Federal Reserve’s monetary easing path, while Apple slipped following a rating downgrade.
Wall Street stumbled in the first two sessions of 2024, with the benchmark S&P 500 (.SPX) notching its worst two-day performance since late October as investors booked profits after a blistering rally last year.
Hopes that the Fed could start interest rate cuts this year had driven much of the gains towards the end of 2023, though the latest minutes from the central bank’s December policy meeting did not offer many clues on when the easing might commence.
“Those inclined to believe a pivot to lower rates is on the way could take reassurance from indications the central bank thinks inflation is under control,” said Russ Mould, investment director at AJ Bell.
“Anyone more cautious on the prospects for near-term rate cuts could point to a (Fed) reference to maintaining a restrictive stance ‘for some time’.”
Traders now see a 68.3% chance for at least a 25 basis points (bps) rate cut in March and a near 94% probability for May, according to the CME Group’s FedWatch tool.
Yields on U.S. Treasury tenors, an indicator of interest rate expectations, edged up, with the yield on the benchmark 10-year note climbing to 3.964%.
Investors now await the ADP National Employment Report due at 8:15 a.m. ET, and a key jobs report on Friday, both of which could shed some light on the health of the labor market and influence expectations on the rate trajectory.
Also on tap are initial jobless claims data for the week ended Dec. 30 and December S&P services sector activity data.
Apple (AAPL.O) was the only megacap stock in the red, down 0.7% in premarket trading, after brokerage Piper Sandler downgraded the iPhone maker to “neutral” from “overweight”, days after Barclays also cut its rating.
Micron Technology (MU.O) rose 1.1% after brokerage Piper Sandler upgraded its recommendation on the chipmaker to “overweight” from “neutral”.
At 7:04 a.m. ET, Dow e-minis were up 41 points, or 0.11%, S&P 500 e-minis were down 1.5 points, or 0.03%, and Nasdaq 100 e-minis were down 23 points, or 0.14%.
Among other movers, sportswear makers Nike (NKE.N) and Foot Locker (FL.N) shed 1.2% and 2.4%, respectively, after UK retailer JD Sports (JD.L) lowered its annual profit forecast.
Dow component Walgreens Boots Alliance (WBA.O) added 3.3% after reporting better-than-expected profit for the first quarter on strength in its pharmacy operations.
Mattel (MAT.O) dropped 1.5% after brokerage Roth MKM downgraded the Barbie doll maker to “neutral”.
Fubotv (FUBO.N) gained 2.4% after the sports TV streaming platform and Nexstar Media (NXST.O) reached a new multi-year distribution agreement.
