Market Snapshot: S&P 500 futures slip as raft of jobs reports looms

What’s driving markets

Futures indicated stocks will again struggle to continue the strong rally of recent weeks.

The S&P 500 ended Friday at its highest since March 2022, bolstered by falling bond yields amid hopes easing inflation meant the Federal Reserve was finished raising interest rates.

However, the start of the week saw a more circumspect tone, with traders cashing in some of their gains, notably in big tech names, leaving the S&P 500 off 0.5%.

That cautious mood is lingering early Tuesday, even as benchmark Treasury yields
BX:TMUBMUSD10Y
dipped back towards three-month lows, as a poor performance from Asian bourses weighed on sentiment.

Hong Kong’s Hang Seng index
HK:HSI
fell 1.9% and the Shanghai Composite
CN:SHCOMP
lost 1.7%, both to their lowest in more than 12 months. Moody’s downgraded its outlook on China’s debt and highlighted the difficulties facing the world’s second biggest economy.

“Markets have lost a little of their recent poise over the last 24 hours,” said Jim Reid, strategist at Deutsche Bank. “There hasn’t been a specific catalyst for the softness, but the astonishing rally in November and long positioning has led to some skepticism about how much further it’s able to run, at least until we get some more data that’s soft-landing friendly.”

Investors will be keen to see if jobs reports coming over the next few days can support that narrative. The JOLTS, or job opening report, will be released at 10 a.m. Eastern on Tuesday, followed on Wednesday by the ADP survey of private sector hiring, the weekly unemployment claims data on Thursday, and the nonfarm payrolls report on Friday.

Over the last few sessions the market has been “fretting that labor market data, due over the next week, could prove stronger than the Fed would want to see at this stage,” said Steve Clayton, head of equity funds at Hargreaves Lansdown.

The Fed will complete its December policy meeting on December 13, when it is expected to leave interest rates unchanged at a range of 5.25% to 5.50%.

Other U.S. economic updates set for release on Tuesday include the S&P services purchasing managers’ index for November at 9:45 a.m., and the ISM services for November report at 10 a.m.

Companies releasing results on Tuesday include NIO
NIO,
+2.38%,
AutoZone
AZO,
+0.85%
and J.M. Smucker
SJM,
+0.91%
before the opening bell rings on Wall Street, followed after the close by Toll Brothers
TOL,
-0.65%,
Asana
ASAN,
+1.56%
and Box
BOX,
-0.26%.