By Johann M Cherian and Sukriti Gupta
(Reuters) – U.S. stock index futures slipped in choppy trading on Wednesday, as investors assessed a CNN report that said President-elect Donald Trump was mulling a national economic emergency declaration, while a tick up in Treasury yields also pressured riskier stocks.
At 7:34 a.m., Dow E-minis were down 119 points, or 0.28%, S&P 500 E-minis were down 26.25 points, or 0.44% and Nasdaq 100 E-minis were down 134.5 points, or 0.63%.
Futures gave up early gains after the report added that the move will allow Trump to build the new tariff program by using the International Economic Emergency Powers Act, which authorizes a president to manage imports during a national emergency.
Reports around potential surcharges on U.S. trade partners have kept investors on edge. They are also concerned that his policies including mass deportations and tariffs could spark a global trade war and stoke inflation pressures.
Also limiting gains on equities was a tick-up in Treasury yields, with that on the benchmark 10-year Treasury bond at 4.7% – its highest in eight months, at a time when equity valuations are stretched.
Focus will now be on the ADP National Employment Report for December and weekly jobless claims data, both due before markets open, along with comments from Fed Governor Christopher Waller.
The data could offer hints on what to expect from Friday’s crucial non-farm payrolls numbers.
Minutes from the Fed’s December meeting is due at 2:00 p.m. ET, and could shed further light on the central bank’s monetary policy outlook this year.
“It would be interesting to see how concerned Fed members really are about the inflation outlook, potentially justifying the significant revisions in the December (Personal Consumption Expenditure) inflation projections, and whether the December rate cut was a compromise between the hawks and doves ahead of Trump’s second presidency,” said Achilleas Georgolopoulos, market analyst at brokerage XM.
Wall Street’s main indexes ended lower in the previous session, with the benchmark S&P 500 and the tech-heavy Nasdaq logging their biggest daily declines since the Fed’s December meeting, when the central bank issued a cautious stance on upcoming interest rate cuts.
Markets fell after data reflected a robust labor market and upbeat services activity, causing investors to push back expectations on the Fed’s first rate cut to June, after which it is expected to stay on hold for the rest of the year, according to the CME Group’s FedWatch Tool.
Politics is also top on the minds of investors as they anticipate policy changes after Trump’s inauguration later this month.
Among top premarket movers, Advanced Micro Devices dropped 2.6% after brokerage HSBC downgraded the stock to “reduce” from “buy”.
Quantum-computing stocks Rigetti Computing fell 22%, IonQ dropped 13.6% and Quantum Computing lost 25.3% after Nvidia boss Jensen Huang said computers based on the emerging technology are as much as 30 years away.
Tapestry rose 1.2% after Barclays upgraded the luxury name to “overweight” from “equal weight”.
Quarterly corporate updates are also on the horizon with big banks such JPMorgan Chase & Co and Wells Fargo among those expected to kick off the earnings season next week.
Markets will be closed on Thursday for a national day of mourning to mark the death of former President Jimmy Carter.
(Reporting by Johann M Cherian in Bengaluru; Editing by Maju Samuel)
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