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Meta rises as report says job cuts imminent
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Rivian slides on plans to sell bonds worth $1.3 bln
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U.S economy to reach technical recession - BofA CEO
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Futures up: Dow 0.04%, S&P 0.14%, Nasdaq 0.24%
(Updates prices, adds comment)
By Sruthi Shankar and Bansari Mayur Kamdar
March 7 (Reuters) - U.S. stock index futures edged
higher on Tuesday, ahead of Federal Reserve Chair Jerome
Powell's testimony before Congress that could shed more light on
the central bank's interest rate hike plans.
The benchmark S&P 500 closed higher for a third
straight session on Monday, as Treasury yields took a breather
from their recent rally that was driven by expectations of the
Fed holding interest rates at a higher level than many had
expected at the start of the year.
Powell will testify before the Senate Banking Committee at
10:00 a.m. ET (1500 GMT), with investors awaiting his comments
on the Fed's steps aimed at bringing inflation towards its 2%
target.
Powell said at his last press conference that a
"disinflationary process" had begun, while cautioning the
central bank's fight against rising prices was not over.
Inflation data since Powell's Feb. 1 remarks has shown
prices have not fallen by as much as analysts were expecting,
while the labor market has shown signs of resilience.
"The key focus will be on how Powell sees the U.S. labor
market, and whether the FOMC think that economic conditions have
improved or deteriorated since the last Fed meeting," Michael
Hewson, chief market analyst at CMC Markets, said in a note.
"Markets will also be paying attention to whether Powell continues to peddle the same narrative of disinflation ... If he acknowledges that inflation could be much stickier than the Fed thought over a month ago, that could prompt a pullback in U.S. equity markets."
The yield on two-year Treasury notes , which best
reflects short-term rate expectations, hit its highest level
since 2007 at 4.94% last week and has since been hovering below
that level. Rising bond yields tend to weigh on equity valuations,
particularly those of growth and technology stocks, as higher
rates reduce the value of future cash flows.
Recent economic data and comments from Fed policymakers have
prompted traders to reassess the path of rates, with money
market futures pricing in a 28% chance that the central bank
will increase rates by a bigger 50 basis points in March,
according to CME Group's Fedwatch tool.
Traders see Fed fund rates peaking at 5.46% by September,
from the current 4.67%. Investors also await data later this week that is expected
to show nonfarm payrolls increased by 200,000 in February,
compared with the much stronger-than-expected 517,000 jobs
reported in January.
Bank of America Chief Executive Officer Brian
Moynihan said the U.S economy would reach a technical recession
in the third quarter of 2023.
At 06:50 a.m. ET, Dow e-minis were up 12 points, or
0.04%, S&P 500 e-minis were up 5.5 points, or 0.14%, and
Nasdaq 100 e-minis were up 29.25 points, or 0.24%.
Among individual stocks, Rivian Automotive fell
6.1% in premarket trading after the electric automaker unveiled
plans to sell bonds worth $1.3 billion.
Meta Platforms Inc gained 1.8% after Bloomberg News
reported the company will cut thousands of jobs as soon as this
week in a fresh round of layoffs.
(Reporting by Sruthi Shankar and Bansari Mayur Kamdar in
Bengaluru
Editing by Vinay Dwivedi)
