On Tuesday, US stock index futures experienced a decrease, influenced by significant losses in health insurer shares, while market participants awaited further economic indicators and remarks from Federal Reserve officials for clues regarding the potential timing of interest rate reductions.
UnitedHealth (UNH, Financial), CVS Health (CVS, Financial), and Humana (HUM, Financial) saw their shares drop from 3.8% to 8.7% during premarket hours. This decline was a reaction to the US government's decision to maintain the reimbursement rates for Medicare Advantage health plan providers, suggesting that the profit margins for insurers could continue to be compressed in the coming year.
Following a day where the Dow Jones Industrial Average and the S&P 500 Index both fell, partly due to unexpectedly strong manufacturing data which cast doubt on the Federal Reserve's projection of three interest rate cuts as outlined in its last policy meeting.
Key data awaited on Tuesday includes information on factory orders and job vacancies for February. Nonetheless, the spotlight is on the upcoming US non-farm payroll figures for March, anticipated to reveal a slowdown in job additions, albeit with a slight increase in average earnings compared to the previous month.
According to Russ Mould, investment director at AJ Bell, the market is in search of data that strikes a balance, avoiding indications of an overheated market that could delay rate cuts, or disappointing figures that might suggest a severe economic downturn.
Market traders are currently factoring in a 62% likelihood of the Fed implementing a 25 basis point rate cut in June, with expectations of additional cuts in 2024, based on the CME Group's FedWatch tool.
A number of Federal Reserve officials, including John Williams from the New York Fed, Loretta Mester from the Cleveland Fed, and Mary Daly from the San Francisco Fed, are expected to deliver speeches later in the day.
As of 5:53 a.m. ET, Dow e-minis were down by 119 points (0.3%), S&P 500 e-minis had decreased by 6.5 points (0.12%), and Nasdaq 100 e-minis were lower by 29.5 points (0.16%).
This cautious start to the new quarter follows the S&P 500's strongest first quarter performance in five years, with all three major indexes reaching record highs, buoyed by optimism surrounding artificial intelligence and expectations of a more relaxed monetary policy.
In other news, shares of PVH Corp (PVH, Financial), the parent company of Calvin Klein, plummeted 23.4% after the retailer projected an approximate 11% decline in its first-quarter revenue.
