U.S. stock indexes futures pared losses on Thursday, with Nasdaq futures briefly turning positive after data showing an increase in weekly jobless claims suggested the Federal Reserve may need to ease its aggressive monetary tightening cycle.
The number of Americans filing new claims for unemployment benefits rose more than expected last week, but the labor market remains tight even as demand for labor is cooling amid higher interest rates.
The benchmark 10-year Treasury yield moved lower following the report, supporting rate-sensitive growth stocks including Apple Inc and Amazon.com Inc.
Tesla Inc slipped 0.5% as Apollo Global Management Inc and Sixth Street Partners, which had been looking to provide financing for Musk’s $44 billion Twitter deal, are no longer in talks with the billionaire.
Meanwhile, oil prices held near three-week highs after the OPEC+ group of nations’ largest supply cut since 2020 ahead of European Union embargoes on Russian energy is set to tighten global oil supply.
“There’s no question that the reduction in output from OPEC+ is putting some upward pressure on oil prices and on prices at the pump, and that’s very troubling,” said Hugh Johnson, chief economist at Hugh Johnson Economics in Albany, New York.
Data on Wednesday showed increased monthly hiring by private employers in America and a rise in ISM’s services industry employment gauge, suggesting the Fed will keep interest rates higher for longer.
Monthly non-farm payrolls and unemployment rate data, due on Friday, will be at the top of investors’ radar to assess the quantum of the Fed’s future rate hikes.
“Everybody’s waiting for the employment report that will give us a little bit idea as to how the economy is doing,” Johnson said.
Money markets are pricing in a nearly 80% chance of a fourth straight 75-basis-point rate hike at the upcoming Fed meet on November 1-2.
After Fed’s San Francisco President Mary Daly on Wednesday underscored the central bank’s commitment to curb inflation with more interest rate hikes, other officials including Cleveland President Loretta Mester, Fed Board Governor Lisa Cook, Board Governor Christopher Waller and Chicago President Charles Evans will be on the watch-list.
Growing fears of a looming recession in corporate leadership is expected to weigh on capital spending and job openings, Goldman Sachs said in a note.
At 8:54 a.m. ET, Dow e-minis were down 66 points, or 0.22%, S&P 500 e-minis were down 8.75 points, or 0.23%, and Nasdaq 100 e-minis were down 11.75 points, or 0.1%.