(Reuters) – U.S. stock index futures fell on Wednesday as geopolitical tensions in the Middle East and a domestic port strike kept investors on edge ahead of data expected to shed light on the health of the economy and the path of monetary policy.
Wall Street’s major indexes had a rough start to the final quarter of the year, with the S&P 500 and Nasdaq hitting two-week lows in the previous session as investors sold riskier assets after Iran fired missiles at Israel in retaliation for its attacks. In Lebanon.
Oil stocks like SLB and Occidental Petroleum added 2% each in pre-market trade, tracking crude prices, which rose more than 2.5%. Oil rich region. [O/R]
Defense stocks such as Lockheed Martin added 1.3% and RTX rose 1.4%, after the broader S&P 500 aerospace and defense index hit record levels in the previous session.
“The situation remains very volatile, but if Israel’s response is not too aggressive, markets may assume that both countries are willing to escalate after a brief exchange of hostility for the second time this year,” analysts at ING Bank said.
At 05:28 am ET, Dow E-minis were down 174 points, or 0.41%, S&P 500 E-minis were down 15.25 points, or 0.26%, and Nasdaq 100 E-minis were down 50.25 points, or 0.25%.
Futures tracking the small-cap Russell 2000 index fell 0.8%, while safe-haven Treasuries edged lower after Tuesday’s rally. [US/]
The CBOE Volatility Index, Wall Street’s gauge of fear, edged near a three-week high and ended at 19.5.
On the data front, the ADP National Employment Survey for September, which provides insight into the state of the labor market, is due at 08:15 a.m. ET. Key non-farm payrolls data for September is scheduled for release on Friday.
Markets ended last month on a strong note after the US Federal Reserve kicked off its monetary policy easing cycle with an extraordinary 50-basis-point rate cut in an attempt to boost the jobs market. The central bank’s dual mandate of price stability and low unemployment.
According to CME Group’s FedWatch tool, the odds of the Fed delivering a small quarterly rate cut in November are 63.3%, up from 42.6% a week ago.
Investors watched the dock workers strike on the East and Gulf coasts. The walkout costs the U.S. economy about $5 billion a day, analysts at JP Morgan estimate.
Costco, Walmart, Merit Medical Systems, McCormick and Designer Brands have announced plans to strike. Their shares were flat in premarket trading.
Analysts said higher oil prices, along with the port strike, could lift inflation, which has recently edged closer to the central bank’s 2% target.
Among others, the Dow-component fell 5% after Nike withdrew its annual earnings forecast, with a new CEO set to take the helm at the sportswear company.
Markets also analyze the views of policymakers such as Beth Hammack, Alberto Musalem, Michelle Bowman and Thomas Barkin.
(Reporting by Johan M Cherian in Bengaluru; Editing by Pooja Desai)
2024-10-02 15:45:43