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Manufacturing data due after markets open
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Energy stocks gain as oil prices surge
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UNH up on lower-than-expected cut to reimbursement rate
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Tesla falls after modest sequential sales growth
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Futures mixed: Dow up 0.38%, S&P down 0.08%, Nasdaq down 0.69%
(Updates prices throughout; adds details)
By Ankika Biswas and Amruta Khandekar
April 3 (Reuters) - The S&P 500 and the Nasdaq were set
to open lower on Monday as rising oil prices brought back
inflation worries and fueled bets of another interest rate hike
by the Federal Reserve in its next meeting.
Saudi Arabia and other OPEC+ oil producers announced further
output cuts of around 1.16 million barrels per day, threatening
an immediate rise in prices.
This comes just days after cooling inflation raised hopes
that the Fed could soon end its aggressive monetary tightening.
"We could see inflation bottom out a little bit higher than
anticipated, which may mean that the Fed continues their rate
hiking a lot longer and further than many currently expect,"
said Paul Nolte, senior wealth adviser and market strategist at
Murphy & Sylvest.
Major technology stocks and other growth shares such as
Apple Inc , Amazon.com Inc , Microsoft Corp and Alphabet Inc fell between 0.5% and 1.1%
in premarket trade tracking higher U.S. Treasury yields.
This, coupled with a 3.2% fall in Tesla Inc after posting modest quarter-on-quarter sales growth, set the
stage for the Nasdaq and S&P 500 to snap three
days of gains at the market open.
However, a 4.4% gain in energy major Chevron Corp and a 3% rise in UnitedHealth Group Inc following a
softer cut to 2024 Medicare Advantage payments by the United
States were set to help the Dow Jones gain at the open.
Shares of other energy firms such as Exxon Mobil Corp and Occidental Petroleum Corp were also up 4.4%
and 6.3%, respectively. Bets by traders were largely tilted towards a 25-basis point
rate hike in May, with odds of a pause at 46.3%, according to
CME Group's Fedwatch tool.
U.S. stocks have weathered turbulence in the global banking
sector to notch gains in the first quarter, with the S&P 500 jumping 7% and bouncing back from a near 20% drop in
2022.
The tech-heavy Nasdaq recorded its strongest first-quarter jump of 17% since mid-2020. "We've seen the tech sector rally so hard and so far above everything else that we do expect some profit taking during the month of April," Nolte said. Investors will closely monitor S&P Global and ISM manufacturing PMI data for March on Monday, with the latter expected to show manufacturing activity weakened in March. The first-quarter earnings season is also around the corner, with companies expected to start reporting quarterly results in the next few weeks. At 7:58 a.m. ET, Dow e-minis were up 128 points, or 0.38%, S&P 500 e-minis were down 3.5 points, or 0.08%, and Nasdaq 100 e-minis were down 91.25 points, or 0.69%. Among other stocks, shares of American Airlines Group Inc and Delta Air Lines Inc edged lower on rising crude prices. McDonald's Corp rose 0.5% after a report said the burger chain is temporarily closing its U.S. offices this week and preparing to inform corporate employees about layoffs. (Reporting by Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta and Arun Koyyur)
