(Reuters) – Wall Street was poised for a slightly lower open on Wednesday after geopolitical tensions in the Middle East and a domestic port strike left investors nervous, while a survey allayed concerns about a rapid cooldown in the labor market.
In a dour start to the final quarter of the year, the S&P 500 and the Nasdaq logged their biggest one-day drops in nearly a month on Wednesday, after Iran fired missiles against Israel in retaliation for its attacks in Lebanon.
Markets held their ground since, after Israel and the U.S. vowed to strike back, with oil prices climbing more than 3% as traders priced in possible supply disruptions from the oil-rich region. SLB and Occidental Petroleum (NYSE:OXY) added 1.7% and 1.6%, respectively, in premarket trading. [O/R]
Defense stocks such as Lockheed Martin (NYSE:LMT) and RTX gained 0.7% and 1%, respectively, after the broader S&P 500 aerospace and defense index hit a record high in the previous session.
“Sentiment is dominated by the risk of escalating conflict in the Middle East and there is a lack of information on how strong the response is going to be from the Israelis,” said Jay Hatfield, portfolio manager at InfraCap.
Meanwhile, the ADP National Employment report showed the economy added 143,000 private jobs in September, compared with estimates of 120,000, according to economists Reuters polled.
Odds of a quarter-percentage-point rate reduction at the Fed’s November meeting are at 64.2%, up from 42.6% a week ago, according to the CME Group’s (NASDAQ:CME) FedWatch Tool.
“The ADP report was strong and that might be mitigating the volatility, because we’re not in a complete information vacuum,” Hatfield said.
Dow E-minis were down 89 points, or 0.21%, S&P 500 E-minis were down 13 points, or 0.23% and Nasdaq 100 E-minis were down 24.25 points, or 0.12%.
Futures tracking the small-cap Russell 2000 index slipped 0.7%, while safe-haven Treasury bonds dipped after Tuesday’s surge. [US/]
The CBOE Volatility Index, Wall Street’s fear gauge, hovered near a three-week high and was last at 19.49.
Comments from Fed policymakers including Beth Hammack and Alberto Musalem are scheduled through the day, while the focus will stay on Friday’s non-farm payrolls data for September.
Markets ended September higher after the U.S. Federal Reserve kicked off its monetary-policy-easing cycle with an unusual 50-basis-point rate cut to shore up the jobs market, which has taken on a greater importance in the central bank’s dual mandate of price stability and low unemployment.
Investors also monitored a dockworkers’ strike on the East and Gulf coasts which entered its second day. The walkout could cost the American economy roughly $5 billion a day, analysts at JPMorgan estimated.
Some companies such as Walmart (NYSE:WMT), Merit Medical Systems (NASDAQ:MMSI) and McCormick (NYSE:MKC) said they had planned for the strike. Their shares were flat in premarket trading.
Analysts said the spike in oil prices, along with the port strike, could raise inflation, which neared the central bank’s 2% target recently.
Dow-component Nike (NYSE:NKE) slid 7.8% after withdrawing its annual revenue forecast just as a new CEO is set to take the helm.
Humana (NYSE:HUM) tanked 21.7% after it said it expects the total number of members enrolled in its top-rated Medicare Advantage plans for those aged 65 and above to decrease for 2025.
Source: Economy - investing.com
