Wall Street Anticipates Lower Opening as Private Payrolls Outperform Expectations

Wall Street braces for lower start as private payrolls beat estimates, sparking concerns of reduced interest rate cuts by the Federal Reserve.

Apr 3, 2024 - 09:14
Apr 3, 2024 - 09:14
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Wall Street Anticipates Lower Opening as Private Payrolls Outperform Expectations
Wall Street Anticipates Lower Opening as Private Payrolls Outperform Expectations

On Wednesday, Wall Street is poised for a downward start, propelled by robust private payrolls data that has sparked concerns of fewer-than-expected interest rate cuts by the Federal Reserve in the coming months.

The previous day saw the Nasdaq and Dow Jones indices closing at their lowest points in two weeks, a consequence of rising Treasury yields following encouraging manufacturing activity and factory orders data. These positive indicators cast doubt on the Fed's earlier projection of three rate cuts for the year 2024.

March's private payrolls surged by 184,000 jobs, exceeding economists' expectations of 148,000, according to the ADP Employment report. While this is generally seen as positive news for the economy, there are concerns that it may prompt the Federal Reserve to reconsider its plans for interest rate cuts.

The benchmark 10-year U.S. Treasury yield saw a slight increase, edging up to 4.3972%, trading near its peak for the year.

Market traders are now assessing the likelihood of a 25 basis points rate cut in June, with the probability dropping to 57% from last week's 64%, according to CMEGroup's FedWatch tool.

Despite recent strong economic data, including positive remarks from various U.S. central bank officials like Cleveland Fed Bank President Loretta Mester and San Francisco Fed Bank President Mary Daly, who expressed support for three rate cuts this year, investors remain cautious.

Attention is now turning to the upcoming Labor Department's jobs report, expected to be released later in the week, which is anticipated to reveal a rise of 200,000 jobs in March.

Meanwhile, concerns about inflationary pressures are mounting as Brent crude prices approach $90 per barrel.

In premarket trading, Intel witnessed a 5.1% drop following the disclosure of $7 billion in operating losses for its foundry business in 2023. Tesla also experienced a 1.2% decline after falling short of first-quarter delivery estimates. Conversely, Paramount Global saw a 1.9% surge in its stock price amid reports of potential talks with David Ellison, founder of Skydance Media, for a deal.

Also Read: Tesla Faces Stock Decline Following Q1 Delivery Shortfall

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