U.S. stock futures experienced a downturn on Thursday night as investors awaited the release of crucial economic data on Friday. The market does not foresee a rate cut from the central bank at its upcoming meeting this month, with Fed funds futures trading data indicating only about a 7% probability of a quarter-point reduction. This anticipation comes as the 30-stock Dow Jones Industrial Average is on track for a 0.2% decline for the week, while S&P 500 futures and Nasdaq 100 futures each decreased by 0.4%.
The Institute for Supply Management reported an acceleration in growth within the U.S. services industry for December. However, the services index also revealed a rise in prices, intensifying concerns about persistent inflationary pressures. Economists surveyed by Dow Jones predict an increase of 155,000 in nonfarm payrolls, which is less than the previous month's gain of 227,000. The unemployment rate is expected to remain at 4.2%.
Private sector job growth also lagged behind expectations, according to data from payroll service provider ADP. This aligns with the broader sentiment of uncertainty as investors navigate a challenging economic landscape.
"If we get a strong report, which … we're anticipating we will, we may find that the market reaction to that is not great, because it just is one more reason why the Federal Reserve may not lower interest rates this year," remarked Brenda Vingiello.
As the New York Stock Exchange remained closed on Thursday for a national day of mourning for former President Jimmy Carter, stock traders focused their attention on the impending economic reports. In addition to the economic data, wildfires near Los Angeles, including the Palisades Fire—considered one of the city's most destructive natural disasters—continued to impact regional sentiment.
Shares of Edison International plummeted by over 10% during Wednesday’s session due to growing concerns over the wildfires. The major averages are poised for weekly losses, with the S&P 500 down 0.4% and the Nasdaq Composite declining by 0.7%.