Stock futures inched lower on Thursday night as investors look to upcoming job data for clues into how the Federal Reserve may move forward. The action follows a steep sell-off led by bank shares.
Futures tied to the Dow Jones Industrial Average lost 99 points, or 0.3%. S&P 500 futures and Nasdaq 100 futures each shed 0.4%.
Wall Street posted a losing session Thursday. The Nasdaq Composite recorded a 2.05% slide, while the S&P 500 posted a 1.85% dip. The Dow lost 543.54 points, or 1.66%, as the 30-stock index closed below its 200-day moving average for the first time since Nov. 9. All three indexes are on track to end the week down by at least 3%.
Financial stocks led the market down in Thursday’s session, dragged by SVB Financial’s 60% plunge after it announced a plan to raise more than $2 billion in capital in a bid to offset losses from bond sales.
The announcement spurred a sell-off across the financial sector as investors grew increasingly concerned that higher interest rates would result in banks facing losses on loans due to borrower defaults. The financial sector was the worst performing within the S&P 500 at a 4.1% drop — its worst day since 2020.
Wall Street is bracing for February jobs report, which is slated to be released at 8:30 a.m. ET. Economists polled by Dow Jones expect nonfarm payrolls to rise 225,000 in the month, which would mark a slowdown in growth from January’s unexpectedly large gain of 517,000.
The unemployment rate is expected to remain unchanged from January — when it hit a low not seen since 1969 — at 3.4%, according to Dow Jones. Hourly wages are expected to have increased 0.4% from the prior month, gaining 4.8% from 12 months ago, economists estimate.
While having more jobs is considered good for the economy, a better-than-expected report can push stocks lower, according to Brad McMillan, chief investment officer for Commonwealth Financial Network. That’s because more workers can signal more demand, he said, which would indicate higher inflation.
Traders are pricing in a roughly 63% chance of the Federal Reserve raising rates by half of a percentage point at its next policy meeting in about two weeks, according to the CME FedWatch Tool. Investors see Friday’s job report as a key driver in that decision, given the central bank’s continued focus on the strength of the labor market as a justification for rate increases.
“A strong report would be bad news for the Fed, for interest rates, and for markets,” McMillan said. “This is the problem we face tomorrow.”
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