US stock futures were near break-even in premarket trading on Monday as investors brace for a busy week full of key economic data that could position the Federal Reserve to act more aggressively on plans to raise interest rates.
Futures linked to the Dow Jones Industrial Average, the Nasdaq Composite and the S&P 500 were mostly unchanged heading into the open after all three major benchmarks posted their second consecutive week of gains on Friday to close at one-month highs. Meanwhile, bond yields continued to rise, with the 10-year US Treasury note topping 2.5% on Monday morning.
Investors are beginning to price in an increase in rate hikes this year following recent remarks by Fed Chairman Jerome Powell. noted that an increase of 50 basis points was on the table as officials lean towards higher borrowing costs aimed at reining in rising levels of inflation. Economic data out of Washington this week could further stoke expectations that central bank policymakers will go ahead with a half-point hike.
March’s big jobs report is the highlight of this week’s economic reports. The tight labor market has strongly informed the Fed’s decision to rein in monetary policy, with the momentum of the economic recovery suggesting to officials that the US economy could weather less accommodative financial conditions. Furthermore, while an improving labor market is good for US households, widespread job vacancies have left room for significant leverage for workers, driving higher wage gains and further raising inflationary pressures. The report is likely to show another strong reading with payrolls expected to rise by 490,000, according to estimates from economists at Bloomberg.
“The payroll jobs report could be the largest yet in this recovery from the pandemic,” FWDBONDS Chief Economist Christopher Rupkey said in a recent note. “Fed officials are already itching for bigger 50bp rate hikes in upcoming meetings, and the tightest labor market since the 1960s is like pouring gasoline on a fire where any policy official worth their salt is burning with the desire to get interest rates down to neutral 2% levels now.”
Another focal point for traders on the economic data front this week is a new reading on the monthly personal consumption expenditures (PCE) deflator due out on Thursday. The indicator is another indicator of how quickly prices are rising across the country. Consensus economists expect the PCE to post a further 0.6% gain in February, according to data from Bloomberg. The core PCE index, which the Fed uses to conduct monetary policy, is also expected to show a rise when the print is released on Wednesday. Consensus economists expect a 5.5% rise in core PCE in February, compared to a 5.2% rise in January.
Russia’s ongoing invasion of Ukraine also remains on investors’ radar. US officials have retracted controversial comments made by President Joe Biden over the weekend that appeared to call for the impeachment of Russian President Vladimir Putin during a speech in Poland.
Secretary of State Antony Blinken told reporters Sunday during a visit to Israel that the United States is not seeking to remove Putin from power.
“As you know, and as you have heard us say repeatedly, we do not have a regime change strategy in Russia or anywhere else,” Blinken said. “In this case, as in any case, it depends on the people of the country in question. It depends on the Russian people.”
7:55 a.m. ET: Stock futures flat after indices posted two straight weeks of gains
After nine straight sessions of earnings, Apple Inc. (AAPL) is about to end its longest winning streak this year following a report that the iPhone maker is cutting production of its iPhone SEs by about 20% next quarter due to lower demand for consumer electronics.
Apple shares fell as much as 2% in premarket trading on Monday. Apple was trading at around $172.48 a share as of 7:53 a.m. ET.
The tech giant also cut orders for its AirPod headphones by more than 10 million units by 2022. AirPods have become the best-selling wireless headphones, helping Apple grab more than 25% market share worldwide, according to Bloomberg, who cited research by the firm. Counterpoint.
Meanwhile, an Oscar win for the Apple TV movie “CODA” on Sunday. could also be a win for the company in the streaming race.
“If Apple were to win the coveted Best Picture award with CODA, it would catalyze more A+ talent coming to Apple first (or in the top bracket) and could boost Cupertino’s content efforts by multiples for years to come with a huge increase in paid subscribers. Wedbush technology analyst Dan Ives said before the awards show.
7:36 a.m. ET: Stock futures flat after indices posted two straight weeks of gains
These were the main movements in the markets in premarket trading on Monday:
S&P 500 Futures (EN=F): +1.25 points (+0.03%) at 4,537.75
dow futures (YM=F): +22.00 points (+0.06%) to 34,781.00
Nasdaq futures (NQ = F): -12.25 points (-0.08%) to 14,743.50
Raw (CL=F): -$5.29 (-4.64%) at $108.61 a barrel
Gold (GC=F): -$24.70 (-1.26%) at $1,929.50 per ounce
10-year Treasury (^TNX): 0.00 bps to produce 2.492%
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc