Stock Futures Drop With Bonds on Strong Labor Data: Markets Wrap

US stock futures extended losses and Treasury yields rose after data showed the American labor market remains strong, fueling speculation the Federal Reserve has room to keep raising rates.

(Bloomberg) — US stock futures extended losses and Treasury yields rose after data showed the American labor market remains strong, fueling speculation the Federal Reserve has room to keep raising rates.

Contracts on the S&P 500 slumped to session lows after hiring numbers topped estimates in a private payrolls report and new claims for unemployment benefits unexpectedly fell last week. Together, the data suggest resiliency in the labor market that could lead to higher wages. Government employment figures are due Friday.

The Federal Reserve has indicated that tight labor conditions give it room to keep at its battle against rising prices. At the same time, officials remained concerned that financial conditions could get too loose to effectively crimp economic growth, even after the Fed embarked on the most aggressive tightening campaign in four decades. Minneapolis Fed President Neel Kashkari said Wednesday he expects rates to rise as high as 5.4%, while Kansas City Fed’s Esther George said she favors a rise above 5%. 

“The labor market is everything. The recession, how deep it will be, is basically a call on wages at this point. Will wages come down without significant economic weakness or not?” said Dennis DeBusschere, founder of 22V Research. “The data we have gotten on that front this week, so far, is not good.”

In company news, Bed Bath & Beyond Inc. sank premarket after warning it might not be able to continue as a going concern. Silvergate Capital Corp. plunged after the bank said the crypto industry’s meltdown triggered a run on deposits. 

Key events this week:

  • Eurozone retail sales, CPI, consumer confidence, Friday
  • Germany factory orders, Friday
  • US nonfarm payrolls, factory orders, durable goods, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.5% as of 8:55 a.m. New York time
  • Nasdaq 100 futures fell 0.6%
  • Futures on the Dow Jones Industrial Average fell 0.5%
  • The Stoxx Europe 600 fell 0.2%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.4%
  • The euro fell 0.5% to $1.0555
  • The British pound fell 1.1% to $1.1928
  • The Japanese yen fell 0.8% to 133.67 per dollar

Cryptocurrencies

  • Bitcoin fell 0.2% to $16,788.56
  • Ether fell 0.3% to $1,249.09

Bonds

  • The yield on 10-year Treasuries advanced eight basis points to 3.76%
  • Germany’s 10-year yield advanced six basis points to 2.34%
  • Britain’s 10-year yield advanced six basis points to 3.55%

Commodities

  • West Texas Intermediate crude rose 1.4% to $73.86 a barrel
  • Gold futures fell 0.6% to $1,847.30 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Isabelle Lee and Namitha Jagadeesh.

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