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U.S. stock futures fell on Wednesday as bond yields rose as optimism for a rapid interest rate cut faded ahead of the release of new jobs data and Federal Reserve minutes.
Futures for the Dow Jones Industrial Average (^DJI) and the benchmark S&P 500 (^GSPC) both fell about 0.3%. Nasdaq 100 futures (^NDX) fell about 0.5% after a painful session in which tech stocks fell about 1.6%.
Hopes that the year-end market rally would continue into 2024 were dashed on Tuesday as stock indexes and bond prices fell in tandem, marking the worst start to the year in decades. Bond prices fell for the fourth day in a row, with the 10-year US Treasury yield (^TNX) rising nearly 4%.
Traders are starting to back off bets on a Fed rate cut, with 74% now pricing in a March rate cut, up from 89% a week ago, according to the CME FedWatch tool.
read more: Impact of the Fed’s interest rate hike suspension on bank accounts, CDs, loans, and credit cards
Minutes from the Fed’s later scheduled December meeting could provide clues as to how much tightening officials think they will do to get the economy into a “soft landing.”
The JOLTS report on job openings will also be closely watched, given that the unexpected resilience of the labor market is influencing expectations for a Fed shift. Wednesday’s data will set expectations for December’s monthly U.S. jobs report, which will be released on Friday.
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