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U.S. STOCK FUTURES RATTLED AFTER CHINA RETALIATORY TARIFFS, PAYROLL DATA

The main U.S. equity index futures are lower after the release of the latest data on U.S. employment. E-mini S&P 500 futures EScv1 are now down around 2.4% vs a loss of around 2.5% just before the data came out. The futures were already lower, seeing downside follow-through in the wake of Thursday's market rout, and after China retaliated against U.S. tariffs.

The March nonfarm payroll headline jobs number was 228k vs the 135k Reuters Poll. The prior headline jobs read for February was revised down to 117k from 151k.

The March unemployment rate ticked up 4.2% vs a 4.1% estimate, and 4.1% last month.

Wage data, on a month-over-month basis was in-line with the estimate, and cooler-than-expected on a year-over-year basis:

According to the CME's FedWatch Tool, the probability that the Fed sits on its hands and leaves its current target rate of 4.25%-4.50% unchanged at its May 6-7 FOMC meeting is now around 63% vs 66% prior to the release of the data. The chance that the FOMC cuts rates by 25 basis points is now around 37% vs 34%.

Looking out further into 2025, the market is showing a bias for the Fed's next 25 basis point cut to occur in June. After that, rates are now expected to decline in July, September, October and December for a total of about 110 bps of cuts this year.

The U.S. 10-Year Treasury Yield US10YT=RR is now around 3.93%. It was around 3.90% just before the numbers came out. The yield ended Thursday at 4.055%.

Nearly all S&P 500 index .SPX sector SPDR ETFs are quoted lower in premarket trade. Consumer discretionary XLY.P and energy XLE.P, both down about 3.8%, are posting the biggest losses. Utilities XLU.P, up just 0.3%, is the sole gainer.

The SPDR S&P regional banking ETF KRE.P is down around 4%.

Regarding the jobs data, Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said:

"There’s not a lot to dislike about the employment report. Haters will hate, but aggregate hours worked and aggregate weekly earnings both increased. Federal employment cuts are in the data, but not completely as those won’t show up for a few more months."

Jacobsen added "The diffusion index for manufacturing is abysmal and the sector as a whole only added 1,000 jobs. This suggests that manufacturing’s glimmer of hope has faded for now. The Fed doesn’t meet for another month, but when it does it can comfortably cut if tariffs are still in place at that time, but it won’t likely feel a sense of urgency to."

Meanwhile, Fed Chair Powell is scheduled to speak on the economic outlook at the Society for Advancing Business and Writing (SABEW) annual conference at 11:25 a.m. EDT.

Here is a premarket snapshot from around 08:55 a.m. EST:

(Terence Gabriel, Chuck Mikolajczak)

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