U.S. stock futures showed little direction on Thursday as Treasury yields slightly stabilized, indicating a slowdown in the bond market sell-off.
Stock Index Futures Trading
- S&P 500 futures (ES00) declined by 4 points, or 0.1%, to 4294.
- Dow Jones Industrial Average futures (YM00) dropped 45 points, or 0.1%, to 33281.
- Nasdaq 100 futures (NQ00) slipped 16 points, or 0.1%, to 14908.
Previous Day’s Performance
On Wednesday, the Dow Jones Industrial Average (DJIA) climbed by 127 points, or 0.39%, to reach 33130. The S&P 500 (SPX) saw a gain of 34 points, or 0.81%, closing at 4264. Similarly, the Nasdaq Composite (COMP) surged by 177 points, or 1.35%, to settle at 13236.
Influence of U.S. Treasury Market
The fluctuations in the U.S. Treasury market continued to drive the trading of equity-index futures. Traders are analyzing economic data to determine the potential policy direction of the Federal Reserve.
While ten-year Treasuries remained relatively unchanged on Thursday, it is worth noting the significant movement observed in the past two sessions. On Tuesday, the S&P 500 experienced a decline of 1.4% when the ten-year Treasury yield reached a 16-year high of approximately 4.8%. This was primarily triggered by the release of a robust labor market report known as the JOLTS survey.
However, Wednesday witnessed a rebound in the Wall Street stock benchmark, with a 0.8% increase. The surge was attributed to a weaker-than-expected ADP employment report, which contributed to a decline in the ten-year yields from an initial high of approximately 4.87% to around 4.73% by the end of the day.
Preview of the U.S. Jobs Market: Sweet or Sour?
As anticipation builds in the U.S. jobs market, economists and analysts anxiously await Friday’s jobs data. The outcome will determine whether this week leaves a sweet or sour taste in our mouths.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, explains that a positive outcome would be loosening jobs data. However, a still-strong jobs report could fuel hawkish expectations from the Federal Reserve and further boost U.S. yields. The latter scenario is at a critical moment for the market.
Before reaching the eagerly anticipated Friday, traders must navigate some key economic updates on Thursday. This includes the release of the weekly initial jobless claims data and the trade deficit for August, both scheduled for 8:30 a.m. Eastern time.
After experiencing recent market volatility, reflected in the CBOE VIX index hitting a four-month high of 20, technical analyst Mark Newton from Fundstrat suggests that the S&P 500 may rally in the short term. Newton believes that U.S. equity markets are approaching a support level, potentially leading to more meaningful rallies for both equity indices and Treasuries next week. This could coincide with weaker economic data or evidence of the Federal Open Market Committee pausing their rate hikes.
As the week unfolds, all eyes will remain fixed on the outcome of Friday’s jobs data, which has the potential to determine the overall sentiment of the market.