S&P Futures Tick Lower Ahead of Key U.S. Payrolls Data

March S&P 500 futures (ESH23) are trending down -0.06% this morning after three major U.S. benchmark indices closed sharply lower on Thursday amid an aggressive slide in financial stocks while investors looked ahead to a key U.S. nonfarm payrolls report that could set the direction of interest rates. Three major U.S. stock indexes were weighed down primarily by losses in the Financials, Basic Materials, and Consumer Services sectors.

In Thursday’s trading session, all three major U.S. stock indexes erased early gains caused by an unexpected rise in jobless claims and moved sharply lower as the financial sector dragged the broader market into negative territory, with the benchmark S&P 500 dropping to a 1-1/2 month low and the blue-chip Dow slumping to a 4-month low. SVB Financial Group (SIVB) closed down over -60% after announcing an equity raise and the sale of a securities portfolio. In addition, Silvergate Capital Corp (SI) plunged over -42% after the company announced a wind-down of operations and plans to liquidate Silvergate Bank. The biggest U.S. banks were also pressured by the SIVB-led selloff, with Bank of America Corp (BAC), Wells Fargo & Company (WFC), and JPMorgan Chase & Co (JPM) dropping more than -5%. On the positive side, General Electric Company (GE) closed up over +5% after the industrial conglomerate reaffirmed its FY23 earnings guidance and provided a positive outlook for jet engines and maintenance services demand. 

Economic data on Thursday showed weekly initial jobless claims rose to a 2-1/4 month high of 211K, weaker than expectations of 195K, pointing to signs of cracks in the strong U.S. labor market. Also, U.S. continuing jobless claims rose to a 2-1/2 month high of 1,718K, higher than estimates of 1,659K. 

Meanwhile, U.S. rate futures have priced in a 45.7% chance of a 25 basis point rate increase and a 54.3% chance of a 50 basis point hike at the next monetary policy meeting in March. 

Today, all eyes are focused on the U.S. Nonfarm Payrolls data in a couple of hours. Economists, on average, forecast that February Nonfarm Payrolls will come in at 205K, compared to the previous value of 517K.

“Investors are positioning cautiously ahead of payrolls report. A strong jobs report could be perceived by investors that the economy is still strong and the Fed needs to be more aggressive,” said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management.

Also, investors will likely focus on the U.S. Private Nonfarm Payrolls data, which stood at 443K in January. Economists foresee the new figure to be 210K.

U.S. Average Hourly Earnings data will also be closely watched today. Economists expect February’s figures to be +0.3% m/m and +4.7% y/y, compared to the previous numbers of +0.3% m/m and +4.4% y/y.

U.S. Unemployment Rate will be reported today. Economists foresee this figure to stand at 3.4% in February, compared to the previous value of 3.4%.

U.S. Federal Budget Balance data will be reported today as well. Economists estimate February’s figure to be -256.0B, compared to -39.0B in January.

In the bond markets, United States 10-Year rates are at 3.855%, down -1.74%.

The Euro Stoxx 50 futures are down -1.45% this morning as banking stocks head for their biggest one-day decline in nine months, with investors also turning risk-off ahead of crucial nonfarm payrolls data. European stocks have received a negative handover from Wall Street and Asia after main indexes closed deep in the red amid a hefty drop in financial stocks. On the positive side, the U.K. GDP has been reported at +0.3% m/m in January, above expectations of +0.1% m/m, showing the British economy managed to avoid a recession. In corporate news, Casino Guichard (CO.FP) fell over -5% after the retailer reported a decline in Q4 sales and profit.

U.K.’s Industrial Production, U.K.’s Manufacturing Production, U.K.’s Monthly GDP 3M/3M Change, U.K.’s Trade Balance, and Germany’s CPI data were also released today.

U.K. January Industrial Production stood at -0.3% m/m and -4.3% y/y, weaker than expectations of -0.1% m/m and -4.0% y/y.

U.K. January Manufacturing Production came in at -0.4% m/m and -5.2% y/y, weaker than expectations of -0.1% m/m and -5.0% y/y.

U.K. January Monthly GDP 3M/3M Change was at 0.0%, stronger than expectations of -0.1%.

U.K. January Trade Balance stood at -17.86B, weaker than expectations of -17.75B.

The German February CPI has been reported at +0.8% m/m and +8.7% y/y, in line with expectations.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.40%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.67%.

China’s Shanghai Composite today closed lower as financial stocks led a region-wide selloff. The index ended the week in the red, weighed down by uncertainty over the economic outlook and a lack of new catalysts from the ongoing National People’s Congress. Also, the headline of Xi Jinping’s selection for the third five-year term as president failed to provide support for Chinese equities.

At the same time, Japan’s Nikkei 225 Stock Index closed lower even after the Bank of Japan maintained ultra-low interest rates at -0.10% and signaled no changes in its quantitative easing and bond yield control policy. The index’s downward momentum was fueled by losses in the Power, Textile, and Shipbuilding sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 3.58% and hit a new 1-month high of 17.94.

Pre-Market U.S. Stock Movers

DocuSign Inc (DOCU) plunged over -6% in pre-market trading as executive changes at the company outweighed better-than-expected Q4 results and guidance.

Barnes & Noble Education Inc (BNED) climbed about +25% in pre-market trading after the company reported better-than-expected revenue and positive adjusted EBITDA in Q3.

Oracle Corporation (ORCL) dropped over -3% in pre-market trading after the enterprise-software giant’s Q3 revenue fell short of expectations.

Gap Inc (GPS) fell more than -7% in pre-market trading after holiday quarter comparable sales landed short of Wall Street’s expectations.

Nano Dimension Ltd (NNDM) slid over -3% in pre-market trading after the company announced that it had made a formal, non-binding offer to acquire rival 3D printer maker Stratasys for $18.00 a share in cash.

Roblox Corp (RBLX) rose more than +2% in pre-market trading after Jefferies upgraded the stock to buy from hold.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - March 10th

AIA Group (AAIGF), JinkoSolar (JKS), Embraer ADR (ERJ), Buckle (BKE), Target Hospitality (TH), Genius Sports (GENI), Casino Guichard ADR (CGUSY), Urstadt Biddle Properties (UBA), Urstadt Biddle (UBP), Lion Electric (LEV), One Liberty (OLP), Airsculpt Technologies (AIRS), Century Casinos (CNTY), CSI Compressco (CCLP).

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