Investing.com – US Stock Futures and Market Outlook

US stock futures edged broadly lower ahead of the release of the crucial December nonfarm payrolls report on Friday. This data could influence Federal Reserve interest rate expectations, with officials signaling caution regarding potential future cuts. Meanwhile, Taiwan Semiconductor Manufacturing Co. (TW:2330) reported fourth-quarter revenue exceeding market estimates.

1. Futures Generally Lower

On Friday, US stock futures generally pointed downward as investors anticipated key employment data release. By 03:28 ET (08:28 GMT), S&P 500 futures dropped 10 points (0.2%), Nasdaq 100 futures fell 66 points (0.3%), while Dow futures remained mostly unchanged. Wall Street was closed Thursday for the funeral of former US President Jimmy Carter.

The nonfarm payrolls report, a highlight for the trading week, is projected to indicate fewer jobs added in December than the preceding month. A stronger-than-expected figure could pressure US 10-year Treasury yields and strengthen the US dollar, potentially putting downside pressure on stocks.

Analysts at ING noted that while the payroll numbers are pivotal, they need to significantly deviate from consensus predictions to impact the markets.

2. Nonfarm Payrolls Report

Economists forecast a rise of 164,000 jobs in December, with an unemployment rate expected to match November’s 4.2%. Average hourly earnings growth is anticipated to cool slightly to 0.3%, down from 0.4%.

This report is crucial for Federal Reserve policymakers, who are cautious about future rate cuts amidst recent signs of economic resilience. Minutes from the Fed’s last meeting indicated a focus on potential inflation impacts from President Trump’s trade policies, with no immediate rush to lower borrowing costs.

Markets are now anticipating fewer than two rate reductions this year, with the first possibly not priced in until June, pending clarity on Trump’s trade plans.

3. TSMC Sales Exceed Estimates

Taiwan Semiconductor Manufacturing Company (TSMC) reported better-than-expected sales in the fourth quarter, bolstered by strong demand from the AI sector. Sales for October to December reached T$868.42 billion ($26.36 billion), surpassing analyst expectations, as reported by Reuters.

December sales alone surged 57.8% to T$278.16 billion ($8.44 billion). This trend is likely to maintain a positive outlook for chip demand through 2025 as TSMC benefits from increased capital expenditures on AI-related infrastructure, despite a weaker outlook for consumer electronics.

4. Tesla Launches Revamped Model Y in China

Tesla (NASDAQ:TSLA) unveiled an updated Model Y in China to tackle stiff competition from local rivals. Priced at 263,500 yuan, the new Model Y is approximately 5.4% more expensive than its predecessor.

The updated model features a light bar, heated or ventilated seats, and a touchscreen for second-row passengers. Deliveries are expected to start in March, pending regulatory approval. Despite its status as the world’s best-selling car, sales of Model Y have recently slowed due to competitive pressures in China and lackluster EV demand in other regions.

5. Crude Oil Prices on Track for Weekly Gains

Oil prices gained Friday, advancing towards a third consecutive week of gains, supported by increased demand due to severe winter conditions affecting parts of the US and Europe. As of 03:30 ET, US crude futures (WTI) increased 1.0% to $74.71 a barrel, while Brent rose 1.0% to $77.68 a barrel.

Brent crude prices have risen by 6% and WTI by 7% over the three weeks ending Jan. 10. Many regions in the central and eastern US are expected to face below-average temperatures, with extreme cold in several parts of Europe likely to heighten heating demand.

(Reuters contributed reporting.)