US pre-open: Markets steady after huge sell-off as investors await jobs data

(Sharecast News) - US stock markets were expected to tread water on Wednesday morning after a heavy sell-off the previous session, as investors await a barrage of economic data which could determine the near-term outlook for monetary policy. Futures on the Dow, S&P 500 and Nasdaq were trading in a tight range of -0.1% to +0.1% in pre-market deals.

The three benchmark indices on Wall Street suffered declines of 1.3% to 1.9% on Tuesday as US government bonds dropped sharply on the back of expectations that the Federal Reserve will keep rates higher for longer in the wake of recent strong economic data. The JOLTS survey yesterday showed 9.6m job openings in August, up from 8.9m the month before and well ahead of forecasts.

"It feels gloomy right now with a 'higher rates for longer' assumption helping to sour sentiment," says AJ Bell investment director Russ Mould. "This is reflected in the sell-off in bonds - with US government bond yields hitting levels last seen in 2007, not a year with particularly happy memories for investors."

Political uncertainty was also weighing on markets after Republican House speaker Kevin McCarthy was voted out of his position, just days after he secured a bipartisan continuing resolution to avert a government shutdown until 17 November.

"It seems fair to say that this adds further uncertainty to the outlook and may well be contributing to the sell-off in US Treasuries that has been experienced this morning," said analysts at Rabobank in an email.

The yield on a 10-year US Treasury was up a further 0.5 basis points at 4.809%, after touching a high of 4.887% on Tuesday - a new 16-year high.

On the agenda for Wednesday is the all-important ADP Employment Report, which comes ahead of the official non-farm payrolls figure on Friday. ADP is expected to announce at 0815 ET that the US economy added 153,000 jobs in September after 177,000 were created in August.

Service-sector activity data for September is also due for release, along with factory orders for August.

In company news, Intel futures were rising on plans by the semiconductor group to offload a stake in its specialised chip business, which makes programmable chips for the defence and telecoms markets.

Sector peer Apple was set to decline after being hit with a broker downgrade by KeyBanc Capital from 'overweight' to 'sector weight'.