Futures Muted After Jobs Data Raises Odds Of More Rate Hikes

U.S. stock index futures were subdued on Monday on growing risks that the Federal Reserve will continue to hike interest rates after Friday's jobs data highlighted a still-strong labor market.

Nasdaq 100 futures were down slightly, with growth stocks including Apple Inc, Amazon.com Inc and Microsoft Corp slipping in premarket trade.

U.S. employers maintained a strong pace of hiring in March, data on Friday showed, pushing the unemployment rate down to 3.5% and raising odds of the Fed hiking rates one more time next month.

While non-farm payrolls increased by 236,000 jobs last month, slightly weaker than economists' expectations, investors focused on the overall data which signaled labor market resilience.

"We see a disconnect between markets presuming much easier Fed policy on 'softer' data and how the Fed will actually see the data," Citi economists said.

"Not only should high inflation and a still-strong labor market keep cuts unlikely, but we see persistently too-strong inflation, including a 0.5% MoM increase in core CPI this week, as leading to further hikes."

A string of reports last week, including weak private payrolls and job openings data, pointed to slowing labor demand and raised hopes of the Fed pausing its market-punishing rate hikes amid the recent banking sector turmoil.

Traders' bets of a 25-basis point rate hike by the Fed in May have risen to over 65%, according to CME Group's Fedwatch tool, up from 57% last week.

While U.S. stock markets were closed for Good Friday, Treasury yields surged after the data, with the two-year yield, which typically moves in step with rate expectations, jumping to 3.99% on Friday. It was last down at 3.94%. [US/]

The focus this week will shift to U.S. consumer and producer prices data, minutes from the Fed's March meeting and quarterly results from big U.S. banks including JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co.

Analysts expect S&P 500 companies' profits to shrink 5.2% in the first quarter, as per Refinitiv IBES estimates, a reversal from the 1.4% growth forecast at the start of the year.

At 6:48 a.m. ET, Dow e-minis were up 29 points, or 0.09%, S&P 500 e-minis were up 1.25 points, or 0.03%, and Nasdaq 100 e-minis were down 17.25 points, or 0.13%.

First Republic Bank's shares fell 2% as the lender said on Friday it plans to suspend payments of quarterly cash dividends on its preferred stock "as a measure of prudent oversight".

Shares of regional banks were mixed after Fed data on Friday showed deposits at U.S. commercial banks rose near the end of March for the first time in about a month, showing signs of stabilizing after the recent bank failures rocked the banking system and rattled depositors.

Western Alliance Bancorp and PacWest Bancorp were down 1.2% and 0.5%, respectively, while Comerica Inc rose 0.9%.

Pioneer Natural Resources Co jumped 7.4% following a report that Exxon Mobil Corp held preliminary talks with the company about a possible acquisition of the shale oil producer.

Semiconductor stocks such as Micron Technology Inc and Western Digital Corp gained 6.6% and 5.3%, respectively, following Samsung Electronics Co Ltd's plans to cut chip production.