Job Openings Survey Upcoming, Powell’s Rate Commentary – What’s Driving Market Movements

US Stock Futures Slide Ahead of Key Economic Data

US stock futures are trending lower as investors anticipate significant economic data releases this week, particularly job openings and manufacturing figures on Tuesday. Market sentiment is also being influenced by remarks from Federal Reserve Chair Jerome Powell, who indicated that the Fed is not in a hurry to lower interest rates.

1. Futures Decline

On Tuesday, US stock futures pointed downwards as investors entered the final quarter of the year, awaiting important economic indicators and analyzing Powell’s comments.

As of 03:28 ET, Dow futures were down by 112 points, or 0.3%, S&P 500 futures had decreased by 11 points, or 0.2%, and Nasdaq 100 futures fell by 34 points, also 0.2%.

The benchmark S&P 500 recently closed at a new record high, rebounding from a temporary dip triggered by Powell’s indication that further interest rate cuts are not imminent, following a significant 50-basis point reduction last month.

The Dow Jones Industrial Average also achieved an all-time high, and the Nasdaq Composite rose by 70 points, or 0.4%. All three major indices made gains during September and the third quarter.

Analysts from Vital Knowledge noted that while there was plenty of news on Monday, the overall story remained largely unchanged, leading to subdued trading as investors prepared for upcoming economic data.

2. Anticipation of Job Openings and ISM Manufacturing PMI

Traders are gearing up for the first set of fresh US economic data this week, which will shed light on the economy’s health and potentially influence the Fed’s decisions regarding interest rates.

On Tuesday, the Job Openings and Labor Turnover Survey is expected to show approximately 7.640 million job openings for August, slightly down from July’s figure of 7.673 million, which marked a three-and-a-half-year low. This reading, indicative of labor demand, alongside other indicators that hiring has increased and layoffs have remained low, suggests a manageable easing in the job market.

Additionally, investors will focus on the September manufacturing and services purchasing managers’ indices this week for further insights into economic momentum. The ISM manufacturing PMI is projected to rise to 47.6 from August’s 47.2, although it remains below the contraction-expansion threshold of 50. The non-manufacturing PMI, due on October 3, is expected to inch up to 51.6 from 51.5.

Bank of America analysts have suggested that the data might suggest a cooling economy but not a collapsing one.

3. Powell Signals Caution on Rate Cuts

Federal Reserve Chair Jerome Powell conveyed Monday that the Fed may adopt a more conventional strategy of quarter-point interest rate cuts in the future, emphasizing that the trajectory of borrowing costs is not predetermined.

He stated that the Federal Open Market Committee is not "in a hurry to cut rates quickly," even after a significant cut was announced during its recent meeting.

Powell defended the last decision, asserting that it showed the FOMC’s growing confidence that the labor market’s strength can be sustained in a context of moderate economic growth and a consistent decline in inflation to 2%.

He affirmed that the economy remains in "solid shape" and reiterated the Fed’s commitment to utilize its tools to maintain that stability. Powell indicated that two more rate cuts, amounting to a total of half a percentage point, could be warranted by the end of 2024 if expectations hold true.

4. 23andMe CEO Concludes Third-Party Takeover Considerations

Anne Wojcicki, CEO of 23andMe, has stated that the DNA testing company is no longer open to third-party takeover offers, as mentioned in a regulatory filing. Instead, she believes taking the company private would be the most viable path forward.

This announcement follows the resignation of all seven independent directors from 23andMe’s board last month due to a stalled proposal for a management buyout raised by Wojcicki earlier in the year. Wojcicki’s proposal aimed to take the firm private by acquiring outstanding shares at $0.40 each.

5. Oil Prices Decrease

Oil prices fell on Tuesday as concerns over sluggish demand growth overshadowed worries about rising tensions in the Middle East potentially impacting global supply.

As of 03:25 ET, Brent crude dropped 0.8% to $71.13 per barrel, while US crude futures (WTI) fell 0.9% to $67.59 per barrel.

Israel announced that it had commenced "limited" operations against Hezbollah in Lebanon, a situation that heightens the risk of broader conflict in the oil-dependent region involving the US and Iran.

Brent crude saw a 9% decline in September, marking its third consecutive month of losses and the largest drop since November 2022. Additionally, it dropped 17% in the third quarter, the biggest quarterly loss in a year, while WTI fell 7% last month and 16% for the quarter.