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Key jobs report shows strong pace of hiring in March
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First Republic slips as bank suspends preferred stock
dividend
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Semiconductor stocks up; Samsung plans to cut chip output
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Futures mixed: Dow up 0.09%, S&P flat, Nasdaq down 0.13%
(Updates prices throughout)
By Sruthi Shankar and Ankika Biswas
April 10 (Reuters) - U.S. stock index futures were
subdued on Monday on growing risks that the Federal Reserve will
continue to hike interest rates after Friday's jobs data
highlighted a still-strong labor market.
Nasdaq 100 futures were down slightly, with growth
stocks including Apple Inc , Amazon.com Inc and
Microsoft Corp slipping in premarket trade.
U.S. employers maintained a strong pace of hiring in March,
data on Friday showed, pushing the unemployment rate down to
3.5% and raising odds of the Fed hiking rates one more time next
month.
While non-farm payrolls increased by 236,000 jobs last
month, slightly weaker than economists' expectations, investors
focused on the overall data which signaled labor market
resilience.
"We see a disconnect between markets presuming much easier
Fed policy on 'softer' data and how the Fed will actually see
the data," Citi economists said.
"Not only should high inflation and a still-strong labor
market keep cuts unlikely, but we see persistently too-strong
inflation, including a 0.5% MoM increase in core CPI this week,
as leading to further hikes."
A string of reports last week, including weak private
payrolls and job openings data, pointed to slowing labor demand
and raised hopes of the Fed pausing its market-punishing rate
hikes amid the recent banking sector turmoil.
Traders' bets of a 25-basis point rate hike by the Fed in
May have risen to over 65%, according to CME Group's Fedwatch
tool, up from 57% last week.
While U.S. stock markets were closed for Good Friday,
Treasury yields surged after the data, with the two-year yield , which typically moves in step with rate
expectations, jumping to 3.99% on Friday. It was last down at
3.94%. The focus this week will shift to U.S. consumer and producer
prices data, minutes from the Fed's March meeting and quarterly
results from big U.S. banks including JPMorgan Chase & Co , Citigroup Inc and Wells Fargo & Co .
Analysts expect S&P 500 companies' profits to shrink 5.2% in
the first quarter, as per Refinitiv IBES estimates, a reversal
from the 1.4% growth forecast at the start of the year.
At 6:48 a.m. ET, Dow e-minis were up 29 points, or
0.09%, S&P 500 e-minis were up 1.25 points, or 0.03%,
and Nasdaq 100 e-minis were down 17.25 points, or 0.13%.
First Republic Bank's shares fell 2% as the lender
said on Friday it plans to suspend payments of quarterly cash
dividends on its preferred stock "as a measure of prudent
oversight".
Shares of regional banks were mixed after Fed data on Friday
showed deposits at U.S. commercial banks rose near the end of
March for the first time in about a month, showing signs of
stabilizing after the recent bank failures rocked the banking
system and rattled depositors.
Western Alliance Bancorp and PacWest Bancorp were down 1.2% and 0.5%, respectively, while Comerica
Inc rose 0.9%.
Pioneer Natural Resources Co jumped 7.4% following a
report that Exxon Mobil Corp held preliminary talks with
the company about a possible acquisition of the shale oil
producer.
Semiconductor stocks such as Micron Technology Inc and Western Digital Corp gained 6.6% and 5.3%,
respectively, following Samsung Electronics Co Ltd's plans to cut chip production.
(Reporting by Sruthi Shankar and Ankika Biswas in Bengaluru;
Additional reporting by Medha Singh; Editing by Varun H K and
Shounak Dasgupta)
