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U.S. equity futures moved lower in early Tuesday trading, while Treasury bonds and the dollar nudged higher, as investors looked to a cautious start to the traditionally challenging month of September with a focus on the job market.
Stocks closed out August with only muted gains, with investors moving out of growth and tech stocks into the safer confines of Treasury bonds and dividend stocks heading into the autumn months.
The tech-focused Nasdaq, in fact, is now down 0.11% over the third quarter, having notched a modest 0.6% gain in August following an underwhelming second quarter earnings report from star AI chipmaker Nvidia (NVDA) .
Both the Dow Jones Industrial Average and the S&P 500 booked decent August advances, with the later now up 3.44% for the quarter, thanks in part to the rotation into safety that characterized the final trading weeks.
Wall Street’s focus will shift clearly and firmly to the economy this week, with key data on growth in the manufacturing sector due today at 10:00 am Eastern time and a series of readings on the job market slated to begin Wednesday as investors look to cement the timing and pace of Federal Reserve rate cuts.
Markets will shift focus to the job market this week as they look to cement the case for Fed rate cuts over the final four months of the year.
Olivier Douliery/Bloomberg via Getty Images
The Labor Department’s non-farm payroll report is due Friday, with economists expecting a gain of around 160,000 new jobs and a modest tick lower in the headline unemployment rate to 4.2%.
The CME Group’s FedWatch suggests traders have locked-in bets on a Fed rate cut later this month in Washington, with the odds of an outsized 50 basis point reduction pegged at around 33%.
Only six S&P 500 companies are expected to report second quarter earnings this week, including tech equipment maker Broadcom (AVGO) , Dicks Sporting Goods (DKS) , Hewlett Packard Enterprises (HPE) and grocery chain Kroger (KR) to close out the reporting season.
Related: Fed rate cuts may not guarantee a September stock market rally
Second quarter earnings growth has been solid, with collective profits rising 13% from last year to a share-weighted $503.4 billion, paced by the tech and communications sectors.
Earnings growth for the current quarter, which will begin reporting next month, is forecast at around 5.7%, with collective profits of around $513.1 billion, according to LSEG data.
Heading into the start of the trading day on Wall Street, and the final month of the third quarter, futures contracts tied to the S&P 500 suggest a 32 point opening bell decline, while those linked to the Dow are priced for a 228 point pullback from last week’s record close.
The Nasdaq, meanwhile, is called 160 points lower, with Nvidia, Apple (AAPL) and Amazon (AMZN) trading in the red.
U.S. Steel (X) shares were an active early mover, falling 7.7% in premarket to $34.98 per share following comments from Vice President Kamala Harris that suggested she would not support the Steel group’s $14.1 billion takeover by Japan’s Nippon Steel.
In the bond market, benchmark 10-year Treasury note yields were marked 1 basis point lower from last Friday’s close at 3.907% while 2-year notes were pegged at 3.927%.
More Wall Street Analysts:
Analysts reboot Grand Theft Auto maker’s stock price targetAmerican Express stock analyst flags concerning shift in consumer behaviorAnalyst resets Nvidia stock price target before earnings
In overseas markets, European stocks were drifting lower as investors eyed U.S. futures and the spate of jobs data this week, with the Stoxx 600 down 0.26% and Britain’s FTSE down 0.4%.
Overnight in Asia, Japan’s Nikkei 225 ended 0.04% lower in Tokyo, while the MSCI Asia ex-Japan benchmark slipped 0.51% into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
