U.S. stock index futures showed minimal movement on October 4, 2024, as investors awaited crucial payroll data and monitored escalating geopolitical tensions in the Middle East. The Labor Department's non-farm payrolls report, set to be released at 8:30 a.m. ET, is anticipated to indicate steady job growth in September, with the unemployment rate expected to remain at 4.2%.
Paul Donovan, chief economist at UBS Global Wealth Management, noted that while hiring has slowed, job security remains intact, supporting consumer spending. The labor market's performance is under increased scrutiny after the U.S. Federal Reserve's recent interest rate cut of 50 basis points in September, aimed at preventing further employment weakening. The upcoming figures could influence the Fed's policy direction for the remainder of the year.
Market expectations suggest a 68% chance of a smaller 25 basis point rate reduction at the Fed's November meeting, up from 46.7% the previous week. Traders predict a total decrease of 66 basis points in borrowing costs by year-end, reflecting robust service sector activity in September.
As of 5:42 a.m. ET, Dow E-minis were down 28 points (0.07%), while S&P 500 E-minis and Nasdaq 100 E-minis saw slight increases. Wall Street's main indexes closed lower in the previous session, influenced by rising tensions in the Middle East and a recent workers' strike.
Analysts believe these events could affect inflation and labor statistics for October. Energy stocks experienced a slight uptick, with Occidental Petroleum, Exxon Mobil, and Chevron seeing premarket gains due to concerns over supply disruptions linked to the regional conflict.
Meanwhile, ports on the East and Gulf Coasts began to reopen after workers reached a wage agreement, although clearing the resulting cargo backlog will take time. Spirit Airlines shares plummeted 44% following reports of potential bankruptcy talks.
Rate-sensitive growth stocks such as Tesla and Amazon.com saw modest gains, while chip stocks Nvidia and Advanced Micro Devices remained stable.
Reporting by Johann M Cherian in Bengaluru; Editing by Pooja Desai