US Stock Futures Drift Lower in Asian Session Amid Fed Uncertainty

US stock futures faced selling pressure in early trading on Tuesday, November 4, as traders took profit. Rising concerns about a slowing US economy and tariff-fueled inflation fueled stagflation risk, weighing on risk sentiment.

Market optimism over the President Trump—President Xi deal faded. US Treasury Secretary Scott Bessent warned that certain parts of the US economy were already in a recession. He added that the slowdown could broaden if the Fed delays further interest rate cuts. Meanwhile, Fed speakers have joined Fed Chair Powell in tempering expectations of a December cut.

10-year US Treasury yields held above 4.1% after the previous day’s rise, while gold dropped 0.53% to $3,980 in early trading, reflecting shifting sentiment toward the Fed rate path.

Notably, the absence of crucial US labor market data will keep markets on tenterhooks, given the cooler bets on a December Fed rate cut.

Japan Manufacturing Woes Challenge Bank of Japan Rate Hike

US stock futures saw modest losses despite lingering uncertainty over the Fed’s policy outlook. Manufacturing data from Japan could challenge the Bank of Japan’s plans for rate hikes.

The S&P Global Manufacturing PMI fell from 48.5 in September to 48.2 in October. While the headline PMI showed only a modest decline, the components revealed deeper weakness, with new orders falling at the sharpest pace in 20 months. Notably, new export orders fell for the forty-fourth consecutive month. Meanwhile, Japanese goods producers raised output charges in response to a marked rise in input prices.

Waning external demand could temper bets on a December Bank of Japan rate hike. The Bank of Japan has expressed concerns that US tariffs could weigh on wage growth and household spending. USD/JPY rose 0.02% to 154.253 in early trading, edging closer to a potential 155-160 yen intervention zone. Goldman Sachs reportedly downplayed the risks of yen intervention overnight. However, softer Japanese economic indicators could further weaken the yen.

A yen intervention could significantly strengthen the yen, potentially triggering a yen carry trade unwind. These scenarios may weigh on risk assets such as US stock futures.

US Stock Futures: US Job Openings and Fed Speakers in Focus

US stock futures posted losses on Monday, pulling back from last week’s record highs. The Nasdaq 100 E-mini fell 91 points, the Dow Jones E-mini dropped 83 points, while the S&P 500 E-mini declined 16.

Later on Tuesday, US labor market data and Fed speakers will influence sentiment.

Economists forecast JOLTs job openings to drop from 7.227 million in August to 7.2 million in September. A sharper drop in job openings could signal a further cooling in the labor market. Weaker labor market conditions could slow wage growth and curb consumer spending, impacting the US economy.

Labor market data typically influences bets on Fed rate cuts. However, the September numbers may fuel speculation about stagflation, given the Fed’s concerns about inflation. Rising risks of stagflation could send US stock futures lower.

During the October press conference, Fed Chair Powell stated:
“Risks to inflation are tilted to the upside, and risks to employment are tilted to the downside.”

The Kobeissi Letter commented on Powell’s speech, stating:

“Fancy way to say stagflation.”

Beyond the data, traders should continue to monitor Fed speakers. Growing support for delays to rate cuts will likely test demand for US stock futures.

Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500

Despite the morning losses, US stock futures traded above key technical levels, signaling bullish momentum.

Near-term trends will hinge on developments from Capitol Hill, upcoming labor data, and remarks from Fed officials. Key levels traders should monitor include:

Dow Jones

• Resistance: 47,500, 48,000, and the October 28 record high of 48,214.
• Support: 47,000 and the 50-day EMA (46,480).

Nasdaq 100

• Resistance: October 30 record high of 26,399, then 26,500.
• Support: 26,000, 25,750, 25,500, the 50-day EMA (24,862).

S&P 500

• Resistance: October 30 record high of 6,954, then 7,000.
• Support: 6,750, the 50-day EMA (6,691), and 6,500.

Market Outlook: Labor Market Data and Capitol Hill

Traders face an uncertain session ahead, with crucial US labor market data in focus. Meanwhile, the US Senate impasse extended to its 34th day, with no end in sight. Economists expect a prolonged shutdown to adversely affect the US economy, a headwind for US stock futures.

Given these dynamics, traders should closely monitor Fed speakers and developments on Capitol Hill.

Follow our live coverage and consult the economic calendar for real-time market updates.