(Reuters) – U.S. stock index futures were flat to slightly lower on Tuesday as investors awaited labor market data, a day after Fed Chairman Jerome Powell pushed back against market expectations for outsized interest rate cuts.
At an economic conference on Monday, Powell reiterated that the central bank is likely to cut borrowing costs by another 50 basis points by the end of the year, based on data that pointed to robust consumer spending and gross domestic income.
Traders were unsure about the size of the Fed’s upcoming rate cuts. They are now pricing in a 25 basis point cut at the November meeting with a 62.7% probability, up from 41.8% a week ago, according to CME Group’s FedWatch Tool.
With inflation approaching the central bank’s 2% target, the focus is squarely on the labor market as the Fed initiated monetary policy easing in September.
All eyes are on the August Jobs and Labor Turnover Survey (JOLTS), due at 10 a.m. ET, along with the Institute for Supply Management’s final estimate for September manufacturing activity.
“Given that Powell thinks inflation has been defeated, a surprise in the employment reports could still change the Fed’s stance,” Rabobank analysts said in a note.
“After all, it is not predetermined. For example, very poor employment growth or a rise in unemployment could still prompt the FOMC (Federal Open Market Committee) to make a 50 basis point cut.”
At 5:34 a.m. ET, the Dow E-minis were down 111 points, or 0.26%, the S&P 500 E-minis were down 5.25 points, or 0.09%, and the Nasdaq 100 E-minis were down 15 points, or 0.07%, in the plus.
Comments from policymakers, including Atlanta Fed Chief Raphael Bostic, Richmond Chief President Thomas Barkin, Boston Fed President Susan Collins and Governor Lisa Cook, will be analyzed for their insights on the economy and the outlook for monetary policy. policy.
Wall Street’s three major indexes ended September higher, bucking a historical trend of weak stock performance on average during the month. The benchmark S&P 500 and the blue-chip Dow posted gains for the fifth straight month, closing near record highs last session.
Markets also followed a port strike on the East Coast and Gulf Coast, which halted the flow of about half of the nation’s maritime shipping. Shares of Designer Brands, Costco, Walmart and CH Robinson were little changed in premarket trading.
CVS Health added 2.3% after a report showed the healthcare company is exploring options including splitting the company and separating its retail and insurance units.
Tesla was flat ahead of its third-quarter deliveries release on Wednesday, with analysts expecting an 8% increase from a year ago.
(Reporting by Johann M Cherian in Bengaluru; Editing by Maju Samuel)