The stock market today remained on edge as investors waited for the February jobs report and as the war in Iran continued. Futures tied to the Dow Jones dropped by 200 points, while those linked to the S&P 500 and Nasdaq 100 indices fell by ~100 points.
Stock market falls ahead of the US non-farm payrolls data
The US stock market retreated as market participants waited to the upcoming US non-farm payrolls (NFP) data that comes up later today.
Economists polled by Reuters and Bloomberg believe that the labor market softened in February. The average estimate is that the economy added 59k jobs in February, much lower than the 110k it added in January.
Most analysts expect the Bureau of Labor Statistics (BLS) to downgrade its January jobs report as it has done several times in the past few years.
The unemployment rate is expected to remain at 4.3%, while wage growth rose by 3.7% in February, continuing a trend that has been going on for years.
A strong jobs report will be bearish for the stock market as it will be a sign that the labor market is stabilizing, thus reducing the odds of interest rate cuts. On the other hand, a weak jobs report will raise the odds of cuts in the coming months.
Polymarket data shows that the bank will not cut interest rates in its March meeting. Odds of no change in April and June are 89% and 66%. Most traders anticipate the bank to deliver 1 or 2 rate cuts this year.
The stock market will also react to the latest US retail sales data. Economists believe that retail sales retreated in January this year.
The Dow Jones, Nasdaq 100, and S&P 500 indices will also react to the upcoming US inflation data on Wednesday next week.
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War in Iran continues
While the upcoming US non-farm payrolls data are important, the main catalyst for the Dow Jones, S&P 500, and Nasdaq 100 indices on the ongoing war in Iran.
This war has pushed crude oil prices much higher, with Brent and West Texas Intermediate (WTI) to $87 and $84, respectively. Natural gas prices have continued soaring this week, while gasoline jumped to the highest level since 2024.
As a result, US bond yields have continued rising as investors anticipate a more hawkish tone. The ten-year yield rose to 4.173%, while the 30-year to 4.77%.
This trend happened after Politico reported that the US was considering a prolonged war in Iran. It noted that the administration was considering a war that extends to September.
At the same time, the US is considering sponsoring chaos in Iran by funding Kurdish forces, a move that may push crude oil prices higher.