Nasdaq, S&P 500 Futures Nervously Flit Around Ahead Of November Payrolls Data: Will Numbers Support Market Expectations For Slower Rate Hikes?

US stocks are on track for a nervous start on Friday as traders look ahead to the November non-farm payrolls report for trading cues. With the Federal Reserve signaling its intention to potentially pivot, each incoming data is likely to trigger volatility in the market.

On Thursday, the major U.S. averages closed on a mixed note, as traders reacted to economic reports showing a slight letup in inflationary pressure and weakening economic activity. Some of the weakness may be traced back to profit-taking following Wednesday’s strong rally, which took the S&P 500 Index and the Nasdaq Composite indices to their highest level since mid-September.

Financial and real estate stocks were among the worst-hit sectors on Thursday, while tech stocks gained ground.

Here’s a peek into index futures trading:

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY fell 0.06% to $407.13 and the Invesco QQQ Trust QQQ moved down 0.11% to $293.40, according to Benzinga Pro data.

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Spotlight On Jobs Report:

The Bureau of Labor Statistics is scheduled to release its November non-farm payrolls, or NFP, report at 8:30 a.m. EST. Economists, on average, expect the economy to have added 200,000 jobs during the month, according to data compiled by Benzinga Pro. This marks a slowdown from the pace of hiring seen in October when the economy added 261,000 jobs.

The November estimate, though pointing to a slowdown, is still above a sustainable pace, Credit Suisse economists said in a weekly note. That said, the ongoing slowdown will likely encourage the Fed as it plans to ease up on its pace of rate hikes at the December meeting, they added.

The November Federal Open Market Committee meeting’s post-meeting policy statement and minutes as well as Fed Chair Jerome Powell’s speech on Wednesday were construed by traders as a shift in the central bank’s hawkish stance.

Private sector job gains are estimated at 190,000, also slowing from 233,000 additions in the previous month. Demand for temporary staff during the holiday season is likely to have boosted part-time employment.

The results of Challenger, Gray & Christmas’ November survey released on Thursday showed that U.S. firms laid off 76,835 jobs in November, with the bulk of it in the technology sector. This marked a 417% jump. from a year ago and a 127% increase from October. Big techs, including Meta Platforms, Inc. META and Amazon, Inc. AMZN, have drastically cut jobs to grow bottom-line amid the uncertainties that are weighing down on the top line.

The consensus expectation is for the unemployment rate, based on the household survey, to remain stayed put at 3.7% in November.

Average hourly earnings – an inflation gauge, may have grown at a slower month-over-month pace of 0.3% compared to 0.4% growth in October.

“This is still an uncomfortably strong pace of wage growth for the Fed, but it’s approaching levels that may be consistent with a return to the 2.0% inflation target,” Credit Suisse said.

The annual rate of the metric is expected to ease from 4.7% to 4.8%.

The FOMC is set to meet for its final monetary policy meeting of the year on Dec. 13-14, and market participants and analysts alike hope for the Fed to at least slow down the pace of its rate increases.

From near-zero levels before March, the fed funds rate has been increased by a cumulative 3.75% percentage points to 3.75%-4%.

Among other key economic events, Chicago Fed President Charles Evans is scheduled to speak at 10:15 a.m. EST.

Stocks In Focus:

• Eli Lilly & Company LLY spin-off Elanco Animal Health Inc. ELAN tumbled about 19% in premarket trading.
• Zscaler, Inc. ZS fell about 9% in reaction to its tepid guidance.
• Marvell Technology, Inc. MRVL retreated about 7% following its earnings miss.

Commodities, Other Global Equity Markets:

Crude oil futures were snapping a four-session winning streak and traded modestly lower. A barrel of WTI-grade crude oil traded above $81.

Asia-Pacific markets closed uniformly lower amid nervousness over the U.S. jobs data and the European markets were mixed in early trading.

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