Market Sentiment Remains Cautious Ahead of Crucial Jobs Report
As the US stock market reaches new heights, investors are taking a step back to assess the landscape. Following record-breaking performances by the S&P and Nasdaq, index futures have taken a breather, awaiting key economic indicators and commentary from Federal Reserve officials.
Jobs Report Takes Center Stage
October’s Job Openings and Labor Turnover Survey (JOLTS) report, set to release at 10:00 a.m. ET, will provide valuable insights into the labor market. This will be followed by the highly anticipated monthly payrolls figures on Friday, a crucial metric in determining the Fed’s interest rate trajectory. Analysts are keenly watching these reports, as they will influence the Fed’s decision-making process.
Interest Rate Expectations
The recent inflation trajectory has led markets to reassess the policy outlook for 2025. While the terminal rate is expected to hover around 3.75%, there is uncertainty about whether an equilibrium has been reached. According to CME’s FedWatch Tool, traders are pricing in a 72% chance of a 25-bps interest rate cut when the Fed meets later this month.
Fed Officials Weigh In
Fed Governor Christopher Waller has expressed support for another interest rate cut, citing forecasts that inflation will fall to 2%. Meanwhile, New York Fed President John Williams has taken a more cautious approach, stating that while interest rates are likely to decrease over time, the central bank’s next move remains uncertain. Comments from Chicago Fed President Austan Goolsbee and Fed Board Governor Adriana Kugler will be closely watched on Tuesday.
Tech Rally Continues
The Nasdaq and S&P 500 achieved record closing highs in the previous session, as the tech rally spills into December. This follows a stellar November performance, buoyed by former US President Donald Trump’s election victory and the Republican Party’s sweep of both houses of Congress. Analysts attribute this optimism to Trump’s potential plans for tax cuts and deregulation, although tariffs remain a concern due to the risk of a global trade war.
Early Market Movers
In early trading, Dow E-minis were down 5 points, or 0.01%, while S&P 500 E-minis were up 2.25 points, or 0.04%. Nasdaq 100 E-minis slipped 3.25 points, or 0.02%. Zscaler fell 7.6% in premarket trading after analysts expressed disappointment with the cybersecurity firm’s second-quarter revenue forecast. Tesla slipped 1.3% after sales of China-made electric vehicles fell 4.3% year-on-year. U.S. Steel shed 6.8% after Trump reiterated his opposition to Nippon Steel’s planned $15 billion purchase of the company.
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