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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 0.07%, S&P 0.15%, Nasdaq 0.26%
(Updates prices, adds comment)
By Sruthi Shankar and Bansari Mayur Kamdar
March 7 (Reuters) - U.S. stock indexes were set to open
slightly higher on Tuesday in cautious trading 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 hopes the Fed could
hold 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.
"We don't really expect anything new to be shared, he'll
(Powell) probably remain hawkish. He'll say that we need to be
higher for longer and pretty much everything else we've been
hearing so far," said Sam Stovall, chief investment strategist
at CFRA Research, New York.
The yield on two-year Treasury notes , which best reflects short-term rate expectations, hit its highest 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%. "The Street is looking for any indication that the Fed will be aiming more towards 6%, and that would be a bigger concern ... 5.5% is pretty much already being weighed by the market," Stovall said. 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 08:27 a.m. ET, Dow e-minis were up 25 points, or 0.07%, S&P 500 e-minis were up 6.25 points, or 0.15%, and Nasdaq 100 e-minis were up 32.5 points, or 0.26%. Among individual stocks, Rivian Automotive fell 5.7% in premarket trading after the electric automaker unveiled plans to sell bonds worth $1.3 billion. Meta Platforms Inc gained 2.3% after Bloomberg News reported the company will cut thousands of jobs as soon as this week in a fresh round of layoffs. Dick's Sporting Goods rose 6.1% after the retailer forecast annual earnings above Wall Street estimates and more than doubled its quarterly dividend. (Reporting by Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru Editing by Vinay Dwivedi)
@BansariKamdar;))