US stock index futures saw a slight decline on Wednesday, with market participants on edge as they look forward to economic updates and remarks from Jerome Powell, the Chair of the Federal Reserve. This anticipation comes after recent robust US economic indicators have led to a reassessment of expectations for interest rate reductions within the year.
Both the technology-centric Nasdaq and the Dow Jones Industrial Average ended Tuesday's session at their lowest in two weeks, influenced by a rise in Treasury yields. This uptick in yields follows data on manufacturing activity and factory orders that surpassed expectations, casting doubt on the Federal Reserve's potential to lower interest rates three times in 2024 as previously anticipated by many.
On Wednesday, the yield on the benchmark 10-year US Treasury note slightly increased to 4.377%, reaching a high for 2024 at 4.05% during the previous session.
Late in the day, data on private payrolls and the services sector is expected to shed more light on the state of the US economy. Additionally, a series of speeches from US central bank officials, including a scheduled address by Powell at 1210 ET (1610 GMT), are highly anticipated.
Current market odds suggest a 62% likelihood of the Fed implementing a 25 basis point rate cut in June, a slight decrease from the 64% probability noted a week earlier. Expectations for the number of rate cuts this year have also been adjusted downwards, with market watchers now foreseeing approximately two rate cuts, down from three.
Comments made on Tuesday by Loretta Mester, President of the Cleveland Fed, and Mary Daly, President of the San Francisco Fed, highlighted a "reasonable" perspective on reducing US interest rates three times this year. This stance comes despite stronger recent economic data that has introduced some skepticism among investors regarding such outcomes.
The focus is also shifting towards the upcoming jobs report from the Labor Department on Friday, which is anticipated to reveal an addition of 200,000 nonfarm payroll jobs in March, following a February increase of 275,000 jobs.
As of 5:59 a.m. ET, Dow e-minis were observed to be down by 40 points, or 0.1%, S&P 500 e-minis had decreased by 12 points, or 0.23%, and Nasdaq 100 e-minis had fallen by 62.5 points, or 0.34%.
Intel (INTC, Financial) experienced a 5.3% drop in premarket trading after announcing operating losses of $7 billion for its foundry business in 2023, which was a deeper loss than the $5.2 billion reported in the previous year. Meanwhile, Tesla (TSLA, Financial) saw a 0.8% decrease, adding to its nearly 5% fall on Tuesday following the company's failure to meet first-quarter delivery estimates.
Paramount Global (PARA, Financial) witnessed a 4.1% increase after reports emerged that the media conglomerate is considering negotiations with David Ellison, founder of Skydance Media, for a potential deal.
