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Futures muted as Fed minutes confirm more tightening ahead

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A trader works on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 14, 2022. REUTERS/Andrew Kelly

U.S. stock index futures were muted on Thursday after the Federal Reserve’s December meeting minutes showed the central bank’s commitment to taming inflation, with focus turning to key employment data for more clues on the rate hike trajectory.

Wall Street’s main indexes erased some of their gains on Wednesday after meeting minutes showed the Fed was laser-focused on fighting inflation even as officials agreed to slow the interest rate hiking pace to limit risks to economic growth.

“The meeting minutes suggested ‘more evidence’ is needed to confirm inflation is under control,” said Victoria Scholar, head of investment at Interactive Investor.

“Consequently, the Fed is expected to continue raising interest rates, with hawkish policy a continued headwind for equities into 2023.”

Money market participants now expect a 60.5% chance of a 25-basis point rate hike to 4.50%-4.75% in February, but still see rates peaking just below 5% by June.

Investors will closely monitor more jobs data due before the opening bell, including the ADP National Employment report, which is expected to show the private sector added more jobs in December than a month ago.

This comes a day after data showed a moderate fall in U.S. job openings, indicating a still tight market.

The more comprehensive nonfarm payrolls report is due on Friday, with investors hoping to see signs of cooling in the labor market that could give the Fed some reason to slow its monetary tightening.

At 6:03 a.m. ET, Dow e-minis were up 13 points, or 0.04%, S&P 500 e-minis were up 3.25 points, or 0.08%, and Nasdaq 100 e-minis were up 13.5 points, or 0.12%.

Shares of Inc (AMZN.O) jumped 2.8% in premarket trading after Chief Executive Andy Jassy said layoffs will now increase to more than 18,000 roles as part of a workforce reduction it previously disclosed.

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