Market Snapshot: U.S. stock futures steady as major jobs report looms

What’s driving markets

Moves are fairly meager across asset classes as a long weekend for most major financial centers looms.

“As we approach the Easter weekend, risk-off sentiment has continued to grow in markets thanks to another round of weak data that’s added to fears about a potential US recession,” said Henry Allen, strategist at Deutsche Bank.

The S&P 500 closed at a seven-week high on Monday, having been boosted of late by falling bond yields, as traders hoped signs of a slowing economy may ease inflation and allow the Federal Reserve to begin trimming interest rates later this year.

However, recent data — notably covering the jobs market and the service sector — has suggested the pace of economic contraction may be faster than feared and so attention seems to have switched, for now, to the damage such a decline in activity may cause corporate profits.

Consequently the S&P 500 has recorded a two-day 0.8% decline and the tech-heavy Nasdaq Composite, which by the end of last week had surged more than 16% this year, has suffered profit taking, losing 1.8% over the past three sessions.

The nonfarm payrolls report, due Friday when stock markets are closed, may either challenge or confirm these revived economic concerns. And the U.S. first quarter earnings season kicks off at the end of next week when some of the big banks present their numbers.

Jonathan Krinsky, chief technical strategist at BTIG, said that the “mega-cap tech” of the Nasdaq until recently had been the beneficiary of selling in other sectors, but once that “rotation” was finished the market as a whole would be vulnerable.

“This dispersion is something that often occurs in the latter innings of market rallies, and while there is always the chance that the weak catch up to the strong, we continue to see more evidence that it will go the other way, as participation continues to thin, leaving fewer and fewer names working,” said Krinsky in a note to clients.

“SPX so far failed below its February highs of 4,200. While this is still just a trading range between 3,800 and 4,200, we ultimately expect a break below 3,800, which will open the door back towards the October lows (3500-3600),” Krinsky added.

U.S. economic updates set for release on Thursday include the weekly initial jobless claims at 8:30 a.m. St. Louis Fed President Bullard will make a speech at 10 a.m. All times Eastern.