Investing.com – U.S. stock futures fell sharply ahead of Friday's release of the all-important December Nonfarm Payrolls report. This statistic could affect the Federal Reserve's interest rate expectations, and many central bank officials are already expressing some caution about the possibility of future rate cuts. Another company, Taiwan Semiconductor Manufacturing Co., Ltd. (TW:), reported that its fourth quarter sales exceeded market expectations.
1. Futures prices have fallen significantly
U.S. stock futures were mostly lower on Friday as investors braced for the release of important jobs data in late trading.
By 3:28 ET (8:28 GMT), the contract was down 10 points, or 0.2%, down 66 points, or 0.3%, but remained essentially unchanged. Wall Street was shut down Thursday for the funeral of former U.S. President Jimmy Carter.
A hot topic at the end of the trading week is the nonfarm payrolls report, which suggests the U.S. economy added fewer jobs in December than the previous month (more on that below) .
If the numbers are stronger than expected, it could put further upward pressure on the benchmark 10-year Treasury yield, which has recently reached its highest level in months. As a result, the US dollar, which has strengthened recently, could strengthen further and stocks could come under pressure as traders assess higher term premiums and discount rates.
Still, ING analysts said in a note to clients that while salaries are “critically important,” the numbers would need to deviate significantly from consensus to be effective this time.
2. The number of non-agricultural sector employees will continue to increase
Economists expect the next jobs report to show a 164,000 increase in payrolls in December, with the unemployment rate in line with November's 4.2% pace.
Growth in average hourly wages is also expected to slow slightly to 0.3% from the previous forecast of 0.4%.
The report is likely to face intense scrutiny from Fed policymakers, who have expressed some caution about the possibility of future rate cuts, given recent signs of resilience in the U.S. economy. Minutes from the Fed's recent meetings suggested that some members are now placing more weight on the potential impact of President-elect Donald Trump's trade policies on inflation.
Statements from multiple Fed officials last night showed that the staff broadly agrees that there is no rush to lower borrowing costs further. Markets currently expect fewer than two cuts this year, with the first not fully priced in until June, when sweeping new tariffs will be imposed on allies and adversaries alike. President Trump's plans to introduce it may become clearer.
3. TSMC Top Sales Estimate – Report
TSMC, the world's largest contract chipmaker, reportedly posted better-than-expected sales in the fourth quarter, boosted by strong demand from the fast-growing artificial intelligence industry.
Sales for the October-December period exceeded analysts' expectations at NT$868.42 billion ($26.36 billion), Reuters reported, citing independent calculations and LSEG data.
In December alone, the amount rose 57.8% to NT$278.16 billion ($8.44 billion), TSMC said in a statement on Friday.
The gains could contribute to strong chip demand heading into 2025, with TSMC in particular continuing to benefit from increased capital spending in data centers and other AI-related infrastructure. The trend has largely offset weaker demand for chips for consumer electronics, and TSMC has warned that it is unlikely to improve in the short term.
TSMC makes chips for several major technology companies, including AI darling Nvidia (NASDAQ:) and iPhone maker Apple (NASDAQ:).
4. Tesla launches improved Model Y in China
Tesla (NASDAQ:) has unveiled the latest version of its Model Y product in China, as the electric vehicle giant grapples with fierce competition from rivals in the country.
Tesla said in a post on social media platform Weibo (NASDAQ:) that the price of the latest Model Y will start at 263,500 yuan, about 5.4% more expensive than the previous version of the car.
The latest model is equipped with a new light bar, as well as heated or ventilated seats depending on weather conditions and a touchscreen for the car's second row passengers.
Deliveries in China, the world's largest auto market and Tesla's second-largest region, are expected to begin in March, pending regulatory approval.
Sales of the Model Y, the world's best-selling car, have slumped slightly as Tesla battles competitors in China and weak demand for electric vehicles in other markets.
5. Crude oil is on track for a weekly rise
Oil prices rose on Friday, trending higher for the third consecutive week, with demand boosted by severe winter conditions in the United States and parts of Europe.
By 3:30 ET, U.S. crude oil futures (WTI) were up 1.0% at $74.71 per barrel and the contract was up 1.0% at $77.68 per barrel.
In the three weeks to January 10, Brent rose 6% and WTI rose 7%.
Much of the central and eastern United States is expected to experience below-normal temperatures over the next few days, and much of Europe is also experiencing extreme cold, potentially increasing demand for heating.
(Reuters contributed reporting.)
