By Johann M Cherian and Purvi Agarwal
(Reuters) – Wall Street was set for a lower open on Monday as investors paused after a rally in the previous week and exercised caution ahead of numerous job reports and comments through the week from Federal Reserve policymakers, including Chair Jerome Powell.
Dow E-minis were down 69 points, or 0.16%, S&P 500 E-minis were down 15 points, or 0.26% and Nasdaq 100 E-minis were down 71.25 points, or 0.36%.
Futures tracking the small caps Russell 2000 index slipped 0.50%.
The blue-chip Dow closed at a record high on Friday, and the benchmark S&P 500 is a whisker away from an all-time high. Both indexes are set for their fifth straight month of gains, defying a historical trend where September has been a weak month for equities on average.
The world’s most influential central bank kicked off its policy easing nearly two weeks ago, fuelling gains that has propped Wall Street’s three main indexes for a quarterly rise as well.
Data recently has supported the trend of moderating price pressures, while the underlying economy fares well overall, granting the Fed enough room to support the labor market and avoid a recession by reducing borrowing costs further.
Economists say that a mistake in setting interest rates during the last phase of the Fed’s inflation battle could be risky for the economy over the next year as markets await comments from chair Powell at a conference on Monday at 1:55 p.m. ET.
Investors will also keep a close tab on August’s job openings report and September’s pivotal payrolls figure, along with final business activity estimates this week for clues on the outlook for the economy and rate cuts.
“If we start to see a greater-than-expected slowdown in the jobs market, then the forecast for the November Fed meeting could show a greater likelihood of the 50 basis point cut,” said Sam Stovall, chief investment strategist at CFRA Research.
“And if the data shows a weakening of the employment picture, then the Fed will feel like they’ve got to get ahead of the curve.”
Traders have been divided over the Fed’s move at its November meeting, with bets for quarter of a percentage point reduction now at 61.5%, as per the CME Group’s FedWatch Tool. Those for a bigger 50 basis points cut stand at 38.5%, down from 53% last week.
CVS Health rose 3.2% in premarket trading after a report showed hedge fund Glenview Capital Management will meet top executives at the struggling healthcare company to propose ways it can improve operations.
Automakers Ford dropped 3.6% and General Motors lost 4.9% after European peer Stellantis NV slashed its annual forecasts.
Lithium miners such as Albemarle rose nearly 1%, and Arcadium climbed 1% after top metals consumer China’s central bank, in its latest stimulus move, said it would tell banks to lower mortgage rates for existing home loans.
U.S.-listed shares of Alibaba rose 5%, Li Auto jumped 6.9% and PDD climbed 5% tracking domestic stocks that saw their biggest single-day rally since 2008.
Markets also kept an eye on a worker union’s port strike on the East Coast and the Gulf of Mexico that could cause delays and snarl supply chains.
(Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Maju Samuel)