Wall Street Looks To Regain Footing Amid High Volatility After Rate Jitters: As Traders Eye Jobs Data, Analyst Warns Of Deeper Pullback Chances

Zinger Key Points
  • Hotter-than-expected March jobs report could push yields above key resistance at the 4.35%–4.40% range, says a technical strategist.
  • He sees 4,800 on the S&P 500 as a worst-case scenario, with plenty of support before that level.

Stock futures point to a higher opening on Friday after a sell-off in the previous session, suggesting traders are putting their concerns about interest rate hikes behind them. However, the key economic data point of the day — the non-farm payrolls report — could reignite those worries.

Analysts warn that a faster-than-expected rise in average hourly earnings, a key inflation gauge, could aggravate concerns about the Federal Reserve raising rates more aggressively. However, they also suggest that strong economic data, such as a larger-than-expected job gain, might only cause a temporary pullback in the market.

The market will also be closely watching upcoming speeches from Federal Reserve officials, as their comments on inflation and potential rate hikes could significantly impact stock prices. The CBOE Volatility Index (VIX), a measure of market fear, has risen further, highlighting the ongoing volatility.

Futures Today

Futures Performance On Friday ( as of 6:40 a.m. EDT)

FuturesPerformance (+/-)
Nasdaq 100+0.37%
S&P 500+0.30%

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY gained 0.28% to $514.53, and the Invesco QQQ ETF QQQ rose 0.32% to $436.74 according to Benzinga Pro data.

Cues From Previous Session:

Comments from Minneapolis Fed President Neel Kashkari on Thursday spooked the market, leading to a sharp decline in late afternoon trading. Kashkari stated that the Fed wouldn’t cut rates even if inflation remains stagnant. This triggered broad-based selling, with interest-rate-sensitive sectors and growth stocks suffering the most significant losses. The Dow Jones Industrial Average closed at a one-month low, while the S&P 500 and Nasdaq Composite ended their trading day at their lowest points since mid-March.

Quincy Krosby, Chief Global Strategist at LPL Financial, said, “What Kashkari did was deliver a cruel potential reality for the market, that inflation remains stubborn and the Fed, not wanting to repeat the policy errors of the 1970s , may be forced to retreat from suggesting a rate easing cycle.”

IndexPerformance (+/-)Value
Nasdaq Composite-1.40%16,049.08
S&P 500 Index-1.23%5,147.21
Dow Industrials-1.35%38,596.98
Russell 2000-1.08%2,053.83

Insights From Analysts:

Most analysts vouch for the “buy-the-dip” strategy amid the recent slipback by the market. LPL Financial Chief Technical Strategist Adam Turnquist said following Thursday’s sell-off that “momentum and market breadth indicators support a buy-the-dip backdrop.” He noted that April was off to an “unseasonably” slow start and this has left the S&P 500 just below key support from its rising 20-day moving average.

“This has been a consistent spot for demand since the breakout to new highs,” Turnquist said. Wednesday’s violation of the 20-day moving average, according to the analyst, should be considered the first warning sign for a deeper pullback, especially if their follow-through selling pressure on Friday.

A hotter-than-expected March non-farm payroll employment report could push yields above key resistance at the 4.35%–4.40% range, a potential tipping point for risk appetite, Turnquist said. That said, if higher rates are predicated on better-than-expected economic data, equity market pullbacks could be shallow, he added.

“Technically, we view 4,800 on the S&P 500 as a worst-case scenario, with plenty of support before that level,” the analyst said.

LPL’s Chief Global Strategist Quincy Krosby said the market remains highly sensitive to any indication that the data-dependent Fed may need to curtail a rate easing cycle this year. He sees the March non-farm payrolls report’s average hourly wages as a key inflation measure that could move the market on Friday.

If wages edge higher as in the ADP report, Treasury yields will climb and the probability of rate cuts in June will continue to pull back, he said.

Upcoming Economic Data:

The Bureau of Labor Statistics will release the non-farm payrolls report for March at 8:30 a.m. EDT. Economists, on average, expect job growth of 200,000, smaller than the previous month’s 275,000. The jobless rate is widely expected to tick down from 3.9% to 3.8%. The average hourly earnings may have increased at an annual rate of 4.1%, down from the 4.3% pace in February.

The Federal Reserve will release its report on outstanding consumer credit at 3 p.m. EDT. The consensus estimate calls for $12 billion in outstanding consumer credit for March, down from $19.5 billion in February.

Among the Fed speakers lined up for the day are:

  • Boston Fed President Susan Collins: 8:30 a.m. EDT
  • Richmond Fed President Tom Barkin: 9:15 a.m. EDT
  • Dallas Fed President Lorie Logan: 11 a.m. EDT
  • Fed Governor Michelle Bowman: 12:15 p.m. EDT

See also: Best Futures Trading Software

Stocks In Focus:

Commodities, Bonds, and Global Equity Markets:

Crude oil futures are on six-session winning streak and rose modestly on Friday amid supply fears stoked by geopolitical tensions. A barrel of light-sweet crude traded above $86. Gold futures rebounded from Thursday’s modest fall and traded at over $2,310 an ounce. The yield on the benchmark 10-year Treasury held above the 2.3% level ahead of the jobs report.

Bitcoin BTC/USD climbed over the past 24 hours and approached the $67,000 level.

The global equity markets were swathed in a blanket of red amid waning hopes of the U.S. Federal Reserve reducing interest rates, with stock markets in Asia and Europe retreating sharply. The Malaysian, Indonesian and Indian markets bucked the downtrend, although the gains were very modest.

Read Next: Hawkish Fed Voices Lead To Market Slide: ‘It’s Possible Fed Won’t Cut This Year If Inflation Stalls’

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