Written by Shristi Achar A and Shashwat Chauhan
(Reuters) – U.S. stocks fell on Friday, a day after hawkish comments from Federal Reserve officials sent stocks lower as investors braced for key jobs data that could help shape the outlook for monetary policy. Stock index futures rose.
All three major stock indexes ended the session down more than 1% after Fed officials' comments triggered a market-wide selloff.
Minneapolis Fed President Neel Kashkari decided to cut interest rates twice this year at the central bank's meeting last month, but if inflation continues to fall short of the Fed's target, both may become necessary. He said there is.
The CBOE Volatility Index, also known as Wall Street's “fear gauge,” ended the session at its highest since November, last up 0.26 points at 16.62.
But money markets still price in a roughly 61% chance that the central bank will cut interest rates by at least 25 basis points in June, according to the CME FedWatch tool.
Market attention is currently focused on the March non-farm payrolls report, due out at 8:30 a.m. ET, which provides a clear picture of the current state of the labor market and the potential for a rate cut. It is expected to help shape investors' bets.
Economists polled by Reuters expect U.S. payrolls to rise by 200,000 from 275,000 in February, while the unemployment rate is likely to hold steady at 3.9%.
“The narrative surrounding a potential rate cut has been a bit contradictory this week, so we rely a lot on this data to steady the ship,” Sophie Rand Yates, chief equity analyst at Hargreaves Lansdown, said in a note. “There is,” he said.
“Easing in the labor market could support the argument that the economy is returning to a more stable footing.”
Investors will also look for further clues on monetary policy from comments from Federal Reserve Bank President Michelle Bowman, Dallas Federal Reserve President Rory Logan, and Richmond Federal Reserve President Thomas Birkin, all of whom are scheduled to speak that day.
Rising tensions in the Middle East, where oil prices continue to rise amid concerns about supply disruptions, are also a concern for the market. [O/R]
A variety of economic indicators have been mixed this week, including soft service activity reports, strong manufacturing reports, and comments from policy makers, putting pressure on stock prices, with all three indexes on track to decline for the week.
As of 7:25 a.m. ET, the Dow e-mini was up 68 points, or 0.17%, the S&P 500 e-mini was up 14.25 points, or 0.27%, and the Nasdaq 100 e-mini was up 59 points, or 0.33%.
Most mega-growth stocks rose modestly in premarket trading, with Tesla Inc., Nvidia Inc. and Amazon.com Inc. up 0.5% to 0.6%.
Krispy Kreme rose 5.2% in premarket trading after Piper Sandler upgraded the donut chain from “neutral” to “overweight.”
Chipmaker Advanced Micro Devices rose 1.1%, reversing some of its losses after falling more than 8% on Thursday. The Philadelphia Semiconductor Stock Index fell about 3% in early trading.
Shockwave Medical rose 1.3% after Johnson & Johnson agreed to buy the medical device maker for $12.5 billion.
(Reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Shinjini Ganguly)
