By Johann M Cherian and Tharuniyaa Lakshmi
Oct 2 (Reuters) – US stock index futures advanced on Friday as Treasury yields retreated, driven by reduced odds of a rate increase this month, and softer oil prices steadied investor sentiment ahead of a closely watched jobs report.
Brent crude prices slipped below $100 a barrel after a report that the European Union discussed additional diesel and crude stock releases, even though there were no new updates on the resolution to the Middle East conflict.
Chips and megacaps led the gains. Nvidia added nearly 1.2% in premarket trading, while Broadcom and Advanced Micro Devices rose about 1.3% each. Alphabet and Tesla were up nearly 1% each.
Nike fell 10.7% after the US sportswear company forecast a surprise steep drop in annual revenue due to weakness in China, announced job cuts and decided to shake up its global business divisions.
The market is keenly awaiting nonfarm payrolls data for September, set for release at 8:30 a.m. ET, with economists anticipating US job growth to slow and unemployment to hold steady at 4.1% for a third straight month.
“Due to monthly revisions in the payrolls data, the focus could shift to the wage data. While the Fed could look through another month of hot jobs growth, if we get stronger signs of wage pressures building, this will be harder for the Fed to ignore,” said Kathleen Brooks, research director at XTB.
Investors will gauge the data along with other indicators from earlier this week that pointed to robust economic activity and a slower-than-expected increase in prices but still above the central bank’s 2% target.
The latest inflation report and pushback against a back-to-back rate hike in October from at least two top policymakers have led investors to bet on a likely ‘hold’ by the Federal Reserve later this month.
Traders see a 76% chance of Fed rates staying unchanged in October, the CME Group’s FedWatch Tool showed, up from around 29% a week ago.
At 06:46 a.m. ET, Dow E-minis were up 259 points, or 0.51%, and S&P 500 E-minis were up 37 points, or 0.48%. Nasdaq 100 E-minis were up 223.25 points, or 0.73%.
Wall Street’s main indexes finished higher on Thursday after a rebound in US Treasuries eased concerns over soaring yields, following a bond selloff that had pushed the benchmark 10-year yield to multi-decade highs earlier in the day.
Still, the S&P 500 was set for a weekly loss of about 1%, having come under pressure as rising yields raised worries about inflation and mounting government debt.
The yield on the two-year Treasury note, which is closely tied to interest-rate expectations, hovered near Thursday’s more than one-week low.
Friday will also bring August data on factory orders along with comments by Dallas Fed President Lorie Logan.
Among other equities, Moderna gained 1.2% after index operator Nasdaq said the vaccine maker will replace Warner Bros. Discovery in the Nasdaq-100 index from October 9.
Credit-scoring company Fair Isaac fell 6.8% after Bloomberg News reported that the US Federal Housing Finance Agency plans to ease mortgage credit data requirements for Fannie Mae and Freddie Mac.
Reflecting the broader risk-on sentiment, bitcoin gained 2%, while Coinbase and Strategy rose nearly 3% each.
(Reporting by Johann M Cherian and Tharuniyaa Lakshmi in Bengaluru; Editing by Arun Koyyur and Shinjini Ganguli)
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