Wall Street set for tepid open ahead of Powell speech

(Reuters) – Wall Street’s main indexes were set for a muted open on Thursday as data showed a staggering recovery in the labor market, while investors were cautious ahead of remarks from Federal Reserve Chair Jerome Powell amid a recent rise in U.S. bond yields.

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The number of Americans filing for jobless benefits rose last week, likely boosted by brutal winter storms in the densely populated South, though the labor market outlook is improving amid declining new COVID-19 cases.

The crucial monthly payrolls report is expected on Friday.

Wall Street’s main indexes fell for the second straight day on Wednesday as a spike in U.S. bond yields pressured high-flying tech stocks while economy-linked financials, energy, industrials outperformed on hopes of a new round of fiscal aid and vaccinations.

“There is no question that sentiment is cautious as we are in a slight corrective or pullback stage and with most indices trading below their 52-week highs,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“It’s a mix of yield pressure from the previous sessions, coupled with investors holding back ahead of comments from the Federal Reserve.”

Powell is set to speak at a Wall Street Journal conference at 12:05 p.m. ET (1705 GMT) where his comments will be scrutinized for any hints of concern about last week’s jump in bond yields, in what will be his last outing before the Fed’s March 16-17 policy meeting.

Ahead of Powell’s remarks, the 10-year Treasury yields were at 1.477% but they held below last week’s one-year high of 1.614%.

Tech stocks are particularly sensitive to rising yields because their value rests heavily on future earnings, which are discounted more deeply when bond returns go up.

Microsoft Corp, Apple Inc and Amazon.com Inc were flat to slightly lower before the bell.

At 8:40 a.m. ET, Dow E-minis were up 36 points, or 0.12%, S&P 500 E-minis were down 0.5 points, or 0.01% and Nasdaq 100 E-minis were up 4.25 points, or 0.03%.

The S&P 500 is set to open below its 50-day moving average, an indicator of short-term momentum that has proved to be a support line in the recent days. The Nasdaq could wipe out nearly all of its year-to-date gains.

The U.S. Senate is expected to begin debating President Joe Biden’s $1.9 trillion coronavirus relief package on Thursday after agreeing to phase out payments to higher-income Americans in a compromise with moderate Democratic senators.

Boeing Co rose about 1% as the United States and Britain had agreed a four-month suspension of U.S. retaliatory tariffs in a long-running row over aircraft subsidies to allow negotiations to take place.

Disney’s shares dropped 1% as it announced it will close at least 60 Disney retail stores in North America this year and about 20% of its worldwide total, as it revamps its digital shopping platforms to focus on e-commerce.

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