Dow futures drop 100 points; attention focused on payrolls and the banking sector.
U.S. stocks are seen opening mixed Friday, stabilizing after the previous session’s selloff with the focus on the upcoming jobs report and the troubled banking sector.
At 07:00 ET (12:00 GMT), the Dow Futures contract was down 100 points or 0.3%.
Investors were also stressing out before Friday’s U.S. non-farm payrolls report for February with expectations for large wage increases fuelling inflation worries. Fed Chair Jerome Powell this week exacerbated concerns about upcoming interest rate hikes aimed at fighting stubbornly high inflation.
Traders were betting that chances of a 50-basis-point rate hike at the Fed’s March meeting were around 60%, according to CME Group’s Fed Watch tool, up sharply from a probability of 31% before Powell’s Tuesday and Wednesday appearances in Congress.
The move weighed on the financial sector and banking stocks, with the SPDR S&P Regional Banking ETF down more than 2%. Shares of First Republic and Signature Bank were last down about 18% and 12%, respectively.
Wall Street posted a losing session Thursday. A drop in SVB Financial shares spurred a broad financial sector selloff, as investors grew concerned that higher interest rates would result in banks facing losses on loans due to borrower defaults. The selloff pushed the S&P’s financial sector down 4.1% for its worst day since 2020.
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 Fed Watch 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.
DOW JONES TECHNICAL ANALYSIS DAILY CHART:
Dow Jones is currently trading in down channel.
Dow Jones is currently trading below all SMA.
RSI is in the selling zone which suggests bearishness and Stochastic is suggesting a downtrend.
Dow Jones’s immediate resistance is at 32224.73 & its immediate support level is 31990.01
HOW TO TRADE DOW JONES IN THIS WEEK
Dow Jones is trading in a down Channel; it is broken its important support level and the previous day low; it will continue to trade downside until any trend reversal.
