June 1, 2023

Brighton Journal

Complete News World

Wall Street is preparing for a lower opening as the jobs report sparked concerns about a rate hike

  • The major jobs report shows a strong pace of employment in March
  • First Republic declines as the Bank suspends preferred stock dividends
  • semiconductor stocks rising; Samsung plans to cut back on chip production
  • Futures down: Dow 0.36%, S&P 0.52%, Nasdaq 0.82%

(Reuters) – US stock indices were on track to open lower on Monday amid growing concerns that the Federal Reserve will continue to raise interest rates after jobs data on Friday highlighted the continued strength of the labor market.

Futures tied to the technology-heavy Nasdaq 100 index led losses after the long weekend, with growth stocks including Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Microsoft Corp (MSFT.O) falling among them. 0.7% and 1.3% in the initial trade.

Data on Friday showed that US employers maintained a solid pace of hiring in March, bringing the unemployment rate down to 3.5% and raising odds that the Federal Reserve will raise hiring rates again next month.

“Investors remain very bullish that the (price) increases will pan out, but the data the Fed relies on seems to leave room for at least a 25 basis point increase again,” said Rick Mickler, partner at Cherry Lane Investments.

“One has to step back and look at the bigger picture than just the weekly market battles over data. It will take a few more months to see if the economic slowdown persists or whether consumer spending will come back and save us again from a real recession.”

A flurry of reports last week, including weak private payrolls and job openings data, indicated sluggish labor demand and raised hopes that the Federal Reserve would halt interest rate hikes in the market amid recent turmoil in the banking sector.

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However, the odds of the Fed raising interest rates by 25 basis points in May rose to more than 65% after Friday’s jobs data, according to CME Group’s Fedwatch tool, from 57% last week.

This week the focus will shift to US consumer and producer price data, minutes from the Fed’s March meeting and quarterly results from major US banks including JPMorgan Chase & Co (JPM.N), Citigroup Inc (CN), and Wells Fargo & Co (CN). wfc). .n).

Analysts expect earnings for the S&P 500 companies to contract 5.2% in the first quarter, Refinitiv IBES estimates, a reversal from the 1.4% growth forecast at the start of the year.

At 08:21 AM ET, the Dow e-minis were down 122 points, or 0.36%, the S&P 500 e-minis were down 21.5 points, or 0.52%, and the Nasdaq 100 e-minis were down 107.75 points, or 0.82%.

Tesla Inc (TSLA.O) fell 2.6 percent after the electric car maker cut prices in the United States between 2 percent and nearly 6 percent, a move analysts warned could hurt profitability.

First Republic Bank (FRCN) fell 4.1% as the bank said Friday that it plans to suspend quarterly cash dividend payments on its preferred stock “as a prudent oversight measure.”

Regional bank stocks fell after Federal Reserve data on Friday showed that overall credit from US banks fell at a record rate of more than $120 billion in the latest week, on an unadjusted basis.

Western Alliance Bancorp (WAL.N) and PacWest Bancorp (PACW.O) fell 1.4% and 2.5%, respectively.

Pioneer Natural Resources Co (PXD.N) jumped 6.7% after a report that Exxon Mobil Corp (XOM.N) was in preliminary talks with the company about a possible acquisition of the shale oil producer.

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Semiconductor stocks such as Micron Technology Inc (MU.O) and Western Digital Corp (WDC.O) rose 5.5% and 4.7%, respectively, after Samsung Electronics Co Ltd (005930.KS) plans to cut chip production.

Additional reporting by Sruthi Shankar and Anika Biswas in Bengaluru; Additional reporting by Madha Singh. Edited by Varun HK and Shounak Dasgupta

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