US Stock Futures Decline; Attention on JOLTS and ISM Data

U.S. stock futures experienced a slight decline on Tuesday as investors absorbed comments from Federal Reserve Chair Jerome Powell and anticipated forthcoming economic data.

By 06:10 ET, the Dow Futures contract was down 145 points, or 0.3%, the S&P 500 Futures fell by 6 points, or 0.1%, while Nasdaq 100 Futures rose by 20 points, or 0.1%.

The Dow Jones Industrial Average and the S&P 500 reached record closing highs on Monday, buoyed by the Federal Reserve’s decision to cut interest rates by 50 basis points earlier in the month, which led to a positive September—traditionally a weak month for the stock market.

All three major Wall Street averages saw gains in both September and the third quarter, marking the first positive September for the S&P 500 since 2019. The S&P 500 has risen over 20% this year, marking the first time since 1997 that the benchmark index exceeded this threshold in the first nine months of the year.

Powell Temper Expectations for Rate Cuts

As the new month commenced, Wall Street took a cautious stance following Powell’s remarks, which tempered expectations for another significant rate cut this month. He indicated that the committee was not in a hurry to lower rates quickly, emphasizing that the process of reducing the fed funds rate would unfold gradually.

Strategists at Goldman Sachs interpreted Powell’s comments as aligning with their forecast of 25 basis point cuts in November and December. They mentioned that the decision between a 25 or 50 basis point cut in November remains a close call. The Fed began shifting its policy last month with the rate reduction, marking the first cut since 2020.

Economic Data on the Horizon

Investors are now looking at a heavy slate of U.S. economic data for insights regarding the Fed’s approach to potential rate cuts this year.

The Job Openings and Labor Turnover Survey (JOLTS) report is expected to reveal approximately 7.640 million available jobs for August. Additionally, the September readings of the Institute for Supply Management’s manufacturing and services purchasing managers’ indices will be scrutinized for further indications on the American economy’s momentum.

The week will conclude with the release of the October nonfarm payrolls report on Friday, with economists forecasting that the U.S. economy added around 144,000 jobs.

CVS Health Considers Strategic Options

On the corporate front, CVS Health saw its stock rise over 2% in premarket trading after reports suggested the company is exploring options, including a potential separation of its retail and insurance divisions. According to sources, CVS Health has been in discussions with its financial advisors about several options, including a possible split.

Oil Prices Fall Amid Market Concerns

Oil prices declined sharply on Tuesday as concerns over weak demand growth overshadowed anxieties about escalating tensions in the Middle East impacting global supply. By 06:10 ET, Brent crude was down 1% to $71.02 per barrel, while U.S. crude futures (WTI) fell 1.2% to $67.36 per barrel.

Israel reported limited military operations against Hezbollah targets in Lebanon, raising fears of further conflict in the oil-rich region, which could involve the U.S. and Iran. However, a significant drop in Chinese manufacturing activity in September also hinted at a slowdown in demand from the world’s largest crude importer, adding to bearish sentiment in the market.

The American Petroleum Institute is expected to disclose its weekly estimate of U.S. crude oil and fuel stockpiles for the week ending September 27.