Stock Market Today: Dow futures struggle for traction as traders eye approaching jobs data

The S&P 500’s rally of 1.8% over just the last two sessions is nice, “but not a game changer yet,” according to BTIG’s technical guru, Jonathan Krinsky.

The chart he provides, below, shows the stock barometer (SPX) now faces some resistance related to the downtrend from last month’s all time high.

“We suspect it backs off from here initially, but closing through ~6025 would imply a test of all-time highs around 6100. A failure here brings last week’s lows (5830) back into play,” he says.

The U.K.’s 30-year borrowing costs touched their highest since 1998 as sticky inflation and a struggling economy saw investors baulk at buying long-term government debt.

The yield on the 30-year gilt hit 5.22% on Tuesday, the steepest in 26 years, after the U.K. Treasury auctioned £2.25bn worth of bonds maturing in 2054 at a yield of 5.20%, the highest this century.

U.K. bond yields have been climbing with their U.S. peers in recent months amid evidence that inflationary pressures remain stubborn and may be exacerbated by President-elect Donald Trump’s tariff strategy lifting prices of goods. U.K. annual consumer price inflation accelerated to 2.6% in November, up from 2.3% the previous month, and above the Bank of England’s 2% target.

However, whereas the the U.S. economy remains in decent fettle, the U.K.’s is struggling, with the Bank of England forecasting zero growth in the last quarter of 2024.

This stagflationary landscape is discouraging buyers of longer-duration U.K. debt, an acute problem given the government intends to sell £297 billion of bonds this fiscal year, which is the second-highest on record.

Stocks making notable moves in Tuesday’s premarket action include:

Ten-year Treasury yields were hovering just shy of their highest since last May, and the 30-year yield was close to its highest since November 2023, as investors continued to show concern that President-elect Trump’s import tariff and immigration plans may revive inflationary pressures.

Upward momentum on yields also reflects a belief that the U.S. economy is robust enough not to need additional swift interest rate cuts from the Federal Reserve.

To that end, investors will be keeping a close eye on a batch of labor data in coming days, including the November job openings report on Tuesday, the December ADP report and weekly initial jobless claims on Wednesday, and the December nonfarm payrolls report on Friday.

“We expect the Fed would require a clear miss in key dimensions [in the NFP report] to spur a rate cut this month (payroll growth well below 100k and a jobless rate above 4.3%) versus proceeding with the hold that is currently well priced in,” said a team of strategists at BNP Paribas.

Currently, markets are pricing in just a 6.9% probability that the Fed will cut interest rates by at least 25 basis points from the range of 4.25% to 4.50% after its next meeting on January 29, according to the CME FedWatch tool. The chances of at least a 25 basis point rate cut by the subsequent meeting in March is priced at 39.7%.

Another factor providing upward pressure on yields is concern about the U.S. governments’ burgeoning budget deficit and the amount of debt that may thus need to be issued.

The Treasury will auction $39 billion of 10-year notes on Tuesday, part of a $119 billion of sales crammed into the first three days of this week.

Here are some of the potential market catalysts due Tuesday for traders to consider:

How are stock-index futures trading:

On Monday, the Dow Jones Industrial Average fell 26 points, or 0.06%, to 42,707, the S&P 500 increased 33 points, or 0.55%, to 5,975, and the Nasdaq Composite gained 243 points, or 1.24%, to 19,865.

Futures indicate little change for stocks when the opening bell rings later on Wall Street as bullish sentiment is curtailed by the sight of Treasury yields holding near recent highs amid lingering concerns about stubborn inflation.

Traders will be keen to see what a raft of jobs data in coming sessions imply about the likely trajectory of Federal Reserve interest rate cuts. Today sees the job openings report, while the nonfarm payrolls data is published on Friday.

Still, the S&P 500 sits just 1.9% shy of its record high hit a month ago, with the latest gains coming from strength in big tech, particularly Nvidia. The AI-chipmaker rose 3.4% on Monday to a record high in anticipation of CEO Jensen Huang’s speech to the CES conference, and is up another 1.5% in premarket action.

“After a sluggish December, U.S. stocks have kicked off the year in style, with tech and semiconductors stealing the spotlight, buoyed by Nvidia buzz, chatter about Microsoft’s $80bn capex plans, and tariff optimism despite mixed signals from Trump,” says Matt Britzman, senior equity analyst at Hargreaves Lansdown.

Susan Streeter, research director at XTB, says: “Some are concerned that tech stocks are too highly valued, however, a forward P/E ratio of 38x earnings [for Nvidia] is not that high for a tech company, analysts expect earnings and revenues to expand and new products beyond the Blackwell chip could also boost sales down the line.”

“Thus, tech stocks may continue to lead the charge higher in U.S. equity markets as we move through January,” Streeter adds.