VOT Research Desk
Nov 3
Market Analytics and Considerations
U.S. stock index futures fell on Thursday, indicating a fresh selloff fueled by concerns that the Federal Reserve’s rate-hike cycle is far from over, as the central bank hinted at smaller rate increases.
After the Fed raised rates by 75 basis points as expected, the benchmark S&P 500 finished 2.5% lower on Wednesday, marking its largest percentage decline in almost a month. However, Chair Jerome Powell stated that it was “very premature” to discuss when the Fed might pause the rate hikes.
Stocks had gained initially because the policy announcement left room for smaller increases, and traders were still split between a 50 bps or 75 bps increase in December.
However, rate futures markets suggested that the Fed funds rate would rise to 5% or higher next year, as opposed to the previous estimate of 4.50 percent to 4.75 percent. the U.S. economy is beginning to decelerate, inflation remains stubbornly high, and the labor market is still very tight.
The Fed is unlikely to emit dovish tones until stronger proof of this has emerged, despite the fact that “the balance of evidence suggests that the inflation news will improve from here.”
This week’s data showed that private payrolls in the United States went up more than expected in October and that job openings went up unexpectedly in September, indicating that the labor market is resilient.
Investors will pay attention to other important data, such as Friday’s nonfarm payrolls report, to see if the Fed’s rate hikes have significantly cooled the labor market.
According to a Reuters poll, initial jobless claims are expected to rise to 220,000 for the week ending Oct. 29 from 217,000 for the week ending Oct. 22 in the data that is scheduled to be released on Thursday at 8:30 a.m. Eastern Time.
Separately, the Institute for Supply Management’s non-manufacturing PMI is expected to fall to 55.5 in October from 56.7 in September in a survey that is due at 10:00 a.m. ET.
At 6:40 a.m., the Dow e-mini were lower 140 points, or 0.44 %. S&P 500 e-mini were dropped 20.75 points (0.55%) and Nasdaq 100 e-mini were off 74 points (0.68%) as of Eastern Time (ET).On Wednesday, rate-sensitive growth stocks came under pressure due to the possibility of higher rates, causing the tech-heavy Nasdaq to fall 3.4%.
Apple Inc. (NASDAQ: shares of megacap technology companies)Microsoft (NASDAQ: AAPL),Alphabet and Microsoft (NASDAQ:In premarket trading, GOOGL) fell between 0.2 and 1.0 percent as the 10-year U.S. Treasury yield reached its highest level since Oct. 25. [US/] Qualcomm, Inc.After the chipmaker’s forecast for holiday-quarter revenue fell about $2 billion short of Street estimates, QCOM) Inc. plunged 8.1%.
Roku (NYSE:Following the streaming platform’s forecast that holiday-quarter revenue would fall short of Wall Street estimates due to a decrease in ad spending, ROKU) Inc. fell 20.3%.
