(Reuters) – Wall Street’s major indexes were set to open softly on Wednesday as weaker-than-expected private payroll data for March deepened concerns that the Federal Reserve’s rapid interest rate hike could tip the US economy into recession.
The US National Employment Report (ADP) showed that US private sector employment rose by 145,000 jobs last month, compared to economists’ expectations for an increase of 200,000 jobs, adding to recent signs of a deteriorating labor market.
As concerns mount about the deteriorating economic outlook in the wake of the recent turmoil in the banking sector, market expectations have shifted in favor of the US central bank which is pressing the brakes to raise interest rates.
“The Street understands that with the ADP payrolls slowing … and the possibility that we will get a drop in the payroll numbers on Friday, the economy is already slowing and the Fed will only need to raise the rate again, if at all,” Sam said. Stovall, chief investment strategist at CFRA Research in New York.
“But at the same time, I think investors are watching very closely to make sure we don’t fall into a deep recession.”
Traders’ bets on a pause by the Fed in May have risen to 62.2%, while odds of a 25 basis point rate hike have fallen to 37.8%, according to CME Group’s Fedwatch tool.
With US Treasury yields falling after the data, major technology and growth stocks such as Meta Platforms Inc (META.O), Tesla Inc (TSLA.O) and Amazon.com Inc (AMZN.O) all gained in pre-market trade.
All eyes now turn to March Nonfarm Payrolls, a more comprehensive employment report, due out on Friday for more telling clues about the state of the labor market.
Also in focus are final data on the S&P Global Composite and Services PMI and a report on March non-manufacturing activity from the Institute for Supply Management, after the opening bell.
At 8:27 a.m. ET, the Dow e-minis were down 12 points, or 0.04%, the S&P 500 e-minis were down 4.75 points, or 0.12%, and the Nasdaq 100 e-minis were down 4 points, or 0.03. %.
The benchmark S&P 500 and tech-heavy Nasdaq (.IXIC) are now on track for their first weekly drop in four in the shortened week over the holiday.
Wall Street’s major indices ended lower in the previous session, with the S&P 500 (.SPX) snapping a four-day winning streak after US employment and factory orders fell.
Among stocks, Nvidia Corp (NVDA.O) fell 1.7% in pre-market trading after Alphabet Inc (GOOGL.O) said the supercomputers it uses to train its AI models were faster and more energy efficient. of similar systems from the chip maker. Alphabet shares rose 1.5 percent.
Albemarle Corp (ALB.N) fell 3.2 percent after Bank of America Global Research downgraded the stock of the world’s largest lithium producer to “underperform”.
Johnson & Johnson (JNJ.N) gained 2.6% as the company’s $8.9 billion bid to settle talc-related lawsuits garnered the support of thousands of claimants, easing the burden on its plans to list consumer health unit Kenvue.
FedEx Corp (FDX.N) rose 2.8% as the leading shipping company said it would consolidate its operational divisions into a single organization while ramping up efforts to reduce costs and increase efficiency.
Additional reporting by Anika Biswas and Amruta Khandekar in Bengaluru; Editing by Nivedita Bhattacharjee and Shonak Dasgupta
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