Investor Caution Prevails as Crucial Fed Data Looms

U.S. stock futures were mostly flat as investors awaited new payroll data and Federal Reserve meeting minutes. Economists predict a potential downwards revision in job creation numbers. Anticipation builds for Fed Chair Powell's speech amidst speculations on interest rate cuts and inflation risks. Global equity markets reflect cautious optimism.

U.S. stock index futures were largely unmoved on Wednesday, with investors adopting a cautious stance as they await preliminary revisions to U.S. payrolls data and minutes from the Federal Reserve's most recent policy meeting.

The Bureau of Labor Statistics' report, expected at 10:00 a.m. ET, may show that 600,000 to 1 million fewer jobs were created from April 2023 to March 2024, according to Goldman Sachs. "A stronger number wouldn't significantly alter the Federal Reserve's easing trajectory, as current data already suggests a cooling labor market," noted ING strategists in a morning briefing.

Minutes from the Fed's July policy meeting and Chair Jerome Powell's upcoming speech at the Jackson Hole economic symposium are highly anticipated. Guy Stear from Amundi Investment Institute remarked, "We expect Powell to signal a potential rate cut in September, though references to persistent inflation could temper investor enthusiasm."

Market participants currently see a 69.5% chance of a 25 basis-point rate cut and a 30.5% likelihood of a 50 basis-point cut in September, per CME's FedWatch tool. Fed Governor Michelle Bowman cautioned Tuesday against quick policy shifts, citing ongoing inflation risks.

At 05:10 a.m. ET, Dow E-minis rose by 53 points, or 0.13%, and S&P 500 E-minis edged up 2.25 points, or 0.04%, while Nasdaq 100 E-minis dipped by 7.75 points, or 0.04%. The recent gains in global equities are fueled by expectations of U.S. rate cuts following sharp declines earlier this month.

Among individual stocks, Target's Q2 earnings are due pre-market. Shares of JD.com fell 7.7% in premarket trading after Walmart divested its entire stake. Conversely, Keysight Technologies surged 11.1%, beating revenue and profit expectations for Q3.

Overall, trading volumes have been light this month as many investors are away for the summer.

(With inputs from agencies.)