March 8 (Reuters) - U.S. stock index futures edged higher on Wednesday after hawkish comments from Federal Reserve Chair Jerome Powell fueled a selloff on Wall Street a day earlier, stoking concerns about a sharp recession and putting focus on the upcoming labor market data.
The main U.S. stock indexes fell more than 1% on Tuesday, with the benchmark S&P 500 (.SPX) logging its biggest percentage decline in two weeks, after Powell told U.S. lawmakers the Fed will likely need to raise interest rates more than expected as it seeks to tame inflation.
Traders drastically increased their bets that the U.S. central bank will raise rates by 50 basis points later this month, with money market futures pricing in a 64.1% chance of such a move.
BlackRock's chief investment officer of global fixed income, Rick Rieder, said the Fed could raise rates to 6% and keep them there for an extended period of time to fight inflation. Traders currently see the Fed funds rate peaking at 5.64% by September.
Meanwhile, a closely watched part of the U.S. Treasury yield curve saw its deepest inversion in more than 40 years on Tuesday. Such an inversion is seen as a reliable recession indicator.
"We're now expecting three fresh rate rises, and expectation is also growing that there could be a half a percent hike just at the March meeting," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
"It'll apply more pressure on companies and consumers and worries are increasing that the U.S. economy won't fall like a feather into a mild downturn, but will slam into a recession."
Powell will testify again before the House Financial Services Committee at 10:00 a.m. ET.
Investors will closely watch February private payrolls numbers and job openings data for January later in the day for clues on the state of the labor market after surprisingly strong January jobs data raised worries that the Fed could keep interest rates higher for an extended period.
The ADP report at 08:15 a.m. ET (1315 GMT) is expected to show private employers hired 200,000 workers in February after adding 106,000 jobs in January.
Another set of numbers at 10:00 a.m. ET is likely to show U.S. job openings increased to 10.5 million in January after an unexpected rise to 11 million in the previous month.
At 06:52 a.m. ET, Dow e-minis were up 34 points, or 0.1%, S&P 500 e-minis were up 5 points, or 0.13%, and Nasdaq 100 e-minis were up 26.5 points, or 0.22%.
Among stocks, Tesla Inc (TSLA.O) slipped 0.6% in premarket trading after Berenberg downgraded the stock to "hold" and data showed China's passenger vehicle sales fell 20% in the first two months of this year.
Snapchat operator Snap Inc (SNAP.N) added 0.5% and looked set to extend gains for a fourth straight day as the White House backed legislation to give the administration new powers to ban Chinese-owned video app TikTok and other foreign-based technologies.
Occidental Petroleum Corp (OXY.N) gained 3.1% after Warren Buffett's Berkshire Hathaway Inc (BRKa.N) increased its stake in the oil company to about 22.2%.
WeWork Inc (WE.N) climbed 7.9% after the New York Times reported the flexible workspace provider was in talks to restructure its outstanding debt of more than $3 billion and raise more cash.
