By Trevor Hunnicutt

WASHINGTON (Reuters) -President Joe Biden on Friday will mark three years since the Jan. 6 attacks on the U.S. Capitol with a warning to voters that Republican Donald Trump, his likely 2024 election opponent, is a threat to the country’s standing as a free democracy.

Trump, president from 2017 to 2021, who is leading the field for the Republican nomination for president, contested his defeat in the 2020 election, prompting thousands of his supporters to attack the U.S Capitol on Jan. 6, 2021. The failed bid to stop formal certification of the result killed five people and injured dozens of police officers.

Speaking near George Washington’s Revolutionary War-era winter headquarters in Pennsylvania, Biden, a Democrat, will kick off his 2024 campaign with the pitch that he represents a continuation of the style of democratic government Americans have grown up with and that a vote for Trump would be a leap into a dark, uncharted future.

Biden was scheduled to deliver his remarks a day before the Jan. 6 anniversary to avoid a forecast winter storm.

As president, Biden has warned about the future of U.S. democracy before, including on the first anniversary of Jan. 6, and in a fiery Sept. 2022 speech where he called Trump and his Republican followers extremists who threatened to take the country backward.

Republicans challenging Trump in the 2024 nominating contest have mostly steered clear of criticizing Trump’s actions on that day, as opinion polls show Republican voters are less likely to blame Trump for his actions on Jan. 6 than they were three years ago.

Whether Biden’s Friday speech will make an impact 10 months before Election Day – in a politically polarized country where voters get news and information from wildly different sources – remains to be seen.

The 2024 race is expected to be closely contested, and Biden aides see Pennsylvania, home to Biden’s Scranton birthplace, as a must-win state. He won in 2020 with 50.01% of the vote. In 2016, Trump won Pennsylvania with 48.58% of the vote.

Biden’s arguments have done little to soothe his own supporters’ concerns about the state of the economy or his age, 81.

Trump, 77, holds a marginal, two-point lead in a head-to-head matchup with Biden, 38% to 36%, with 26% of respondents saying they were unsure or might vote for someone else, according to the latest Reuters/Ipsos poll.

Biden prepared for the long-planned speech by inviting a group of historians and scholars to the White House for a wide-ranging conversation on the threats to American democracy.

The audience is expected to include people directly affected by “election denialism and the events of Jan. 6,” according to a person familiar with the planning of the speech.

TRUMP ON THE TRAIL

Trump has portrayed the 2024 race in similarly existential terms, calling his criminal trials a persecution and describing Biden as a crook.

Despite facing state and federal charges over election interference, Trump in recent months has teased acting as a dictator on “day one” and pledged to investigate, incarcerate and otherwise take revenge on his political opponents.

The Republican frontrunner is expected to spend Saturday’s anniversary campaigning with rallies in Iowa, which hosts the first Republican nominating contest of the presidential race on Jan. 15. His leading opponents have largely avoided raising the Jan. 6 attack or Trump’s role in it.

Lawyers for Trump have disputed that he engaged in insurrection and argued that his remarks to supporters on the day of the 2021 riot were protected by his constitutional right to free speech.

Authorities are seeking information about more than 80 people who committed violence at the Capitol and remain unidentified, Matthew Graves, the U.S. attorney for the District of Columbia, told reporters on Thursday. Graves’ office has overseen the prosecution of more than 1,200 people so far accused of committing crimes during the attack.

Graves said authorities have two more years to charge rioters before the statute of limitations expires.

“Our democracy is fragile,” he told reporters during a briefing on the investigation into the attack. “We cannot replace votes and deliberation with violence and intimidation.”

JOBS, ECONOMY, DEMOCRACY

In 2024, Biden aides plan to pair the threat-to-democracy argument with more bread-and-butter topics about U.S. job growth, falling inflation, healthcare, gun violence and abortion rights, hoping to reassemble the coalition of 81 million voters that won Biden the White House in 2020, with his party then in control of both houses of Congress.

Democrats in the 2022 midterm elections lost control of the House of Representatives to Republicans, but maintained control of the Senate with a slim margin.

Read the latest Reuters news on the US election:

(Reporting by Trevor Hunnicutt; Additional reporting by Andrew Goudsward; Editing by Leslie Adler and Jonathan Oatis)

By Johann M Cherian and Shristi Achar A

(Reuters) -Wall Street’s main indexes edged higher on Friday as gains in megacap stocks outweighed pressure from a stronger-than-expected jobs report that tempered expectations of rapid interest rate cuts this year.

A Labor Department report showed U.S. employers hired more workers than expected in December, while raising wages at a solid clip. The unemployment rate held steady from November at 3.7%, compared with expectations of a 3.8% rise, while average earnings advanced 0.4% on a monthly basis, against forecasts of 0.3% growth.

“While the data confirms that the economy is strong and that a soft landing is in play, it’s a bit of a reality check for a market that was slightly ahead,” said Ross Mayfield, investment strategy analyst at Baird.

“This report certainly pushes expectations out a little bit and May is probably a good base case to use right now (for rate cuts).”

Money markets have scaled back expectations for a rate cut in March, with traders now seeing a 57% chance of at least a 25-basis point cut, from nearly 65% before the data, according to the CME Group’s FedWatch tool.

Meanwhile, the Institute of Supply Management’s (ISM) report showed U.S. services activity slowed considerably in December, with the purchasing manager’s index (PMI) at 50.6, against expectations of 52.6.

Big tech stocks including Amazon.com, Nvidia and Alphabet edged higher between 0.4% and 1.2%, cushioning the indexes.

On a weekly basis, the benchmark S&P 500 was on track for its worst performance since late October as investors cashed in after a nine-week winning streak driven by bets that aggressive rate cuts were on the horizon.

The Nasdaq was on course for its worst week since late September, impacted by rotation out of tech-heavy stocks into defensive sectors like healthcare, financials and utilities.

At 10:00 a.m. ET, the Dow Jones Industrial Average was up 65.67 points, or 0.18%, at 37,506.01, the S&P 500 was up 17.55 points, or 0.37%, at 4,706.23, and the Nasdaq Composite was up 48.55 points, or 0.33%, at 14,558.85.

Financials and energy stocks led advances among the 11 S&P 500 sectors, up 0.7% and 0.6%, respectively.

In company news, Applied Therapeutics tumbled 31.9% after the drug developer’s heart disease drug showed disappointing results in a late-stage trial.

Palantir Technologies lost 1.6% after Jefferies downgraded the data analytics firm to “underperform” due to high stock valuations.

Peloton jumped 11.9% after the fitness equipment maker said it will bring its workout content to short-form video platform TikTok in an exclusive partnership.

Later in the day, investors will parse remarks by Richmond Fed President Thomas Barkin, a voting member this year.

Advancing issues outnumbered decliners by a 1.68-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.08-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and no new low, while the Nasdaq recorded 21 new highs and 42 new lows.

(Reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Devika Syamnath)

By Johann M Cherian and Shristi Achar A

(Reuters) – Wall Street’s main indexes were on course to open lower on Friday after a stronger-than-expected jobs report signaled resilience in the labor market and tempered expectations of rapid interest rate cuts this year.

A Labor Department report showed U.S. employers hired more workers than expected in December while raising wages at a solid clip. Non-farm payrolls increased by 216,000, compared with estimates for an increase of 170,000, according to economists polled by Reuters.

The unemployment rate held steady from November at 3.7%, compared with expectations of a 3.8% rise, while average earnings advanced 0.4% on a monthly basis, against forecasts of 0.3% growth.

“While the data confirms that the economy is strong and that a soft landing is in play, it’s a bit of a reality check for a market that was slightly ahead,” said Ross Mayfield, investment strategy analyst at Baird.

“This report certainly pushes expectations out a little bit and May is probably a good base case to use right now (for rate cuts).”

Money markets have scaled back expectations for a rate cut in March, with traders now seeing a 57% chance of at least a 25-basis point cut, from nearly 65% before the data, according to the CME Group’s FedWatch tool.

Yields on U.S. Treasury notes, an indicator of interest rate expectations, ticked higher after the data, with the yield on the benchmark 10-year note climbing beyond 4% to a three-week high. [US/]

On a weekly basis, the benchmark S&P 500 was on track for its worst performance since late October as investors cashed in after a nine-week winning streak driven by bets that aggressive rate cuts were on the horizon.

The Nasdaq was on course for its worst week since late September, impacted by rotation out of tech-heavy stocks into defensive sectors like healthcare, financials and utilities.

At 8:49 a.m. ET, Dow e-minis were down 144 points, or 0.38%, S&P 500 e-minis were down 20.5 points, or 0.43%, and Nasdaq 100 e-minis were down 78.75 points, or 0.48%.

Among individual stocks, Tesla shed 0.8% before the bell. The electric-vehicle maker is conducting an effective recall on 1.62 million vehicles in China, the market regulator said.

Other megacap names including Apple and Alphabet lost 0.6% and 0.4%, respectively.

Chipmakers Micron Technology, Intel and Qualcomm also declined between 1.8% and 1%.

Applied Therapeutics tumbled 31.9% after the drug developer’s heart disease drug showed disappointing results in a late-stage trial.

Palantir Technologies lost 4.5% after Jefferies downgraded the data analytics firm to “underperform” due to high stock valuations.

Later in the day, investors will parse remarks by Richmond Federal Reserve President Thomas Barkin, a voting member this year.

(Reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Devika Syamnath)

(Reuters) – U.S. stock index futures extended losses after a stronger-than-expected jobs report signaled resilience in the labor market and tempered expectations of rapid interest rate cuts from the Federal Reserve this year.

The Labor Department’s report showed non-farm payrolls increased by 216,000 in December, compared with expectations for an increase of 170,000, according to economists polled by Reuters.

The unemployment rate held steady from November at 3.7%, compared with expectations of a 3.8% advance, while average earnings rose 0.4% on a monthly basis, against forecasts of 0.3% growth.

At 8:31 a.m. ET, Dow e-minis were down 158 points, or 0.42%, S&P 500 e-minis were down 22 points, or 0.47%, and Nasdaq 100 e-minis were down 86 points, or 0.52%. (This story has been corrected to say economists were expecting an increase of 170,000 jobs, not 173,000, in paragraph 2)

(Reporting by Shristi Achar A in Bengaluru; Editing by Devika Syamnath)

By Johann M Cherian and Shristi Achar A

(Reuters) -U.S. stock index futures slipped on Friday and signaled losses for the first week of 2024, ahead of a key jobs report that could test expectations for an early start to the Federal Reserve’s easing cycle.

The benchmark S&P 500 was on track for its worst week since late October as investors cashed in after a nine-week winning streak driven by bets that aggressive rate cuts were on the horizon.

The Nasdaq was on course for its worst weekly performance since late September, impacted by rotation out of tech-heavy stocks into defensive sectors like healthcare, financials and utilities.

After the recent Fed meeting minutes failed to offer hints on the timeline for monetary easing, traders dialed back rate-cut expectations and now see a 63.8% chance for at least a 25 basis points (bps) cut in March, down from nearly 86% a week ago, according to the CME FedWatch Tool.

Yields on U.S. Treasury notes, an indicator of interest rate expectations, ticked higher with the yield on the benchmark 10-year note rising over 4% to a three-week high. [US/]

All eyes were on the official non-farm payrolls report, due at 8:30 a.m. ET, for clues on how long the Fed could keep credit conditions restrictive.

U.S. job growth likely moderated in December, while the increase in annual wages probably slowed to below 4% for the first time in 2-1/2 years, according to a Reuters survey of economists.

“Demand for labor is moderating, which top policymakers have indicated will be crucial for hitting its 2% inflation target on a sustained basis,” analysts at UBS wrote.

“The consensus forecast is for a modest rise in the unemployment rate and a slowing of the growth in average earnings.”

At 6:56 a.m. ET, Dow e-minis were down 98 points, or 0.26%, S&P 500 e-minis were down 13.5 points, or 0.29%, and Nasdaq 100 e-minis were down 59.25 points, or 0.36%.

Among early movers, Tesla shed 0.8% before the bell. The electric-vehicle maker is conducting an effective recall on 1.62 million vehicles in China, the market regulator said.

Other megacap names including Microsoft, Apple and Alphabet lost between 0.1% and 0.7%.

Chipmakers like Micron Technology, Intel and Qualcomm declined between 1.1% and 1.4%.

Applied Therapeutics tumbled 26.6% after the drug developer’s heart disease drug showed disappointing results in a late-stage trial.

Palantir Technologies lost 3.9% after Jefferies downgraded the data analytics firm to “underperform” due to high stock valuations.

Later in the day, investors will parse remarks by Richmond Fed President Thomas Barkin, a voting member this year.

(Reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Devika Syamnath)

(Reuters) – U.S. investors reduced holdings in equity funds, shifting to money market funds amid caution before key payroll reports, as a stock market rally eased and they awaited further evidence to support expectations of substantial Federal Reserve rate cuts.

They purchased about $56.92 billion worth of U.S. money market funds in their biggest weekly net buying since November 29, while exiting about $5.54 billion worth of equity funds, data from LSEG showed.

U.S. unemployment data on Thursday indicated a still resilient U.S. labour market, tempering hopes of deep rate cuts by the Federal Reserve this year. The release of monthly U.S. payrolls figures later in the day would further influence expectations about the timing and pace of rate cuts.

After gaining for nine successive weeks, the S&P 500 has dipped about 1.7% in the first week of 2024 amid concerns that expectations for steep rate cuts might be premature.

Investors pulled out $687 million, $1.37 billion and $652 million, respectively from U.S. large-, mid-, and multi-cap funds. Small-cap funds remained in demand, attracting $1.32 billion in a fifth straight week of net buying. Among sector funds, the tech sector led outflows, losing $879 million in net selling, followed by $361 million and $214 million worth of outflows respectively from industrials and real estate sectors.

Conversely, U.S. bond funds experienced $4.44 billion worth of purchases, the first weekly inflow in six weeks.

US short/intermediate government & treasury funds received a significant sum of $3.25 billion as investors snapped an eight-weeks-long selling streak.

Short/intermediate investment-grade, and general domestic taxable fixed income funds also received about $1.75 billion and $614 million, respectively.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Toby Chopra)

By Naomi Rovnick and Kevin Buckland

LONDON/TOKYO (Reuters) -Global equities were on course to snap a nine-week winning streak, government bonds sold off, and the dollar was poised for its strongest weekly advance since mid-May, as bets on aggressive central bank rate cuts were rolled back.

MSCI’s broadest index of global stocks dipped 0.3%, heading for a 2% decline this week and its biggest weekly drop since late October.

Europe’s Stoxx 600 index sank 0.9% and government bond yields in the euro zone and United States rose sharply as prices of the interest rate-sensitive debt securities fell.

The gloom looked set to spread to Wall Street later in the session, with futures indicating the S&P share index would open 0.2% lower, now firmly on course for its first weekly decline since October. Futures tracking the tech-focused Nasdaq 100 dipped 0.4%.

Caution was weighing on markets after euro zone inflation data on Friday showed prices in the currency bloc rose 2.9% year-on-year in December, up from 2.4% in November, easing pressure on the European Central Bank (ECB) to start cutting borrowing costs from record highs.

U.S. monthly non-farm payrolls figures later in the day could also provide clues about the next moves for the Federal Reserve, which is expected to cut interest rates from a 22-year high in 2024 but closely watches employment data for signs of resurgent inflationary pressures.

Global markets rallied hard at the end of last year as traders priced in about six Fed rate cuts for 2024 and significant monetary easing by the ECB.

“A weak opening to equity markets in 2024 suggests that investors are experiencing a hangover after December’s exuberance, waking up to the reality that the optimistic upturn may have been too much, too soon,” said Lewis Grant, senior portfolio manager for global equities at Federated Hermes Limited.

Traders on Friday saw around a 60% chance of the Fed starting to cut its funds rate in March from the current range of 5.25% to 5.5%, down from 71% a week ago, according to the CME Group’s Fedwatch tool.

Fed chair Jay Powell “is only going to go as far as the data is going to let him go, so the question about pricing is whether the six rate cuts that were priced in were too many,” added Joe Kalish, chief global strategist at Ned Davis Research.

“They may be too many or not enough, but that will all depend on the data.”

The 10-year Treasury yield, which tracks expectations of long-term borrowing costs and rises as the price of the debt security falls, climbed 5 basis points (bps) to 4.034%. This key debt yield has risen by 18 bps this week.

Germany’s 10-year bund yield rose 7 bps to 2.17% on Friday, on track to end the week 14 bp higher in its largest weekly rise since mid October.

The U.S. dollar index, which measures the currency against a basket of six major peers, added 0.3% to 102.72. For the week, it is up 1.34%.

In Asia, Japan’s Nikkei bucked the downtrend for global equities, bouncing 0.3% as exporters got a boost from a weaker yen. The dollar rose 0.4% to 145.2 yen.

A deadly New Year’s Day earthquake on Japan’s coast has also forced off the table wagers that the Bank of Japan might tighten monetary policy this month.

Elsewhere, gold slipped 0.3% to $2,037 per ounce, on track for a 1.3% weekly slide.

Oil markets remained volatile, as expectations of weak demand from China clashed with concerns about Red Sea supply disruptions following attacks on ships by Yemen’s Iran-backed Houthis. Brent crude futures were last up 0.9% at $78.28 per barrel, after settling down 0.8% overnight. [O/R]

For the week, the global oil benchmark is up 1.6%.

(Reporting by Kevin Buckland and Naomi Rovnick; Additional reporting by Ankur Banerjee; Editing by Ros Russell and Mark Potter)

By Balazs Koranyi

FRANKFURT (Reuters) -Euro zone inflation jumped as expected last month, supporting the European Central Bank’s case to keep interest rates at record highs for some time, even as markets continued to bet on a rapid fall in borrowing costs.

Inflation across the 20-nation bloc jumped to 2.9% in December from 2.4% in November, just shy of expectations for a 3.0% reading, mostly on technical factors, such as the end of some government subsidies and low energy prices getting knocked from base figures.

The data is in line with the ECB’s prediction that inflation bottomed out in November and will now hover in the 2.5% to 3% range through the year, well above its 2% target, before falling to target in 2025.

Still, figures suggested that the structure of inflation is changing and while base and fiscal effects could yank around the headline figure, overall pressures may be easing.

The focus now turns to how wage settlements and global political tensions are impacting prices, two factors that could have longer-term consequences.

Wage deals are finalised in the first quarter in much of the euro bloc but data is not available until May, so policymakers will need perhaps until mid-2024 to get a reliable picture.

Geopolitical tensions are harder to predict. While the war in Gaza has had little effect on energy prices so far, the more recent disruption of shipping via the Suez Canal has pushed up transportation costs.

This in itself is not a big factor for prices but it could lift inflation if goods take longer to reach Europe over an extended period and shortages develop.

“Where higher costs are shipping specific, as at the moment, the inflation impact is very small,” Paul Donovan at UBS Wealth Management said.

“It is not the value of goods shipped, but the changing cost of shipping the goods that matters. Globally, shipping by sea accounts for less than 0.3% of global economic activity.”

EXPECTATIONS

The inflation jump comes as investors and policymakers appear to be drawing different conclusions about price trends and their implication for interest rates.

Investors are betting that the ECB will cut rates six times this year with the first move coming in March or April while policymakers argue that it might take until mid-2024 to gain the confidence that inflation is indeed under control.

“Inflation is far from being defeated,” Commerzbank economist Christoph Weil said. “The ECB is likely to cut its key interest rates significantly less than the market currently expects.”

A key source of the divergence in views is that the ECB’s own inflation projections have been off for years, suggesting that the bank does not have a full understanding of price-setting behaviour in exceptional circumstances.

During the post-pandemic inflation surge, the ECB first predicted just a transitory rise in prices, then a shallower peak, and finally a much slower reversal. This led some policymakers to raise their focus on reported data and lower the emphasis on projections.

Nordea economists Anders Svendsen and Tuuli Koivu think the ECB is wrong again and they see inflation below 1.5% by the end of the summer, well below the ECB’s own projections.

“If inflation prints continue to come in on the soft side, risks of an earlier cut and/or a faster pace of cuts compared to our current baseline of quarterly 25bp rate cuts increase,” they said, adding that the first cut could come in June.

Investors argue that the ECB is too optimistic on growth and also point to a sharp drop in producer prices — down 8.8% in November — as evidence of cooling price pressures.

Markets are also betting on aggressive rate cuts from the U.S. Federal Reserve and investors think that once the world’s biggest central bank moves — in March or May — the ECB will want to move in sync.

(Reporting by Balazs KoranyiEditing by Ros Russell and Toby Chopra)

(This Jan. 4 story has been corrected to read ‘were previously made’, not ‘are made’, in paragraph 5)

LONDON (Reuters) – BAE Systems said it would restart the production of structures for its M777 lightweight howitzer after it signed an initial deal worth up to $50 million with the U.S. Army for the weapon, which has been donated to Ukraine.

The British defence company said it would work with its suppliers in the UK and the U.S. to produce the titanium structures, with the first deliveries planned in 2025.

It said it would start the deliveries while finalising the details of the contract and its total value.

BAE Systems said it had seen an increase in interest from across Europe, Asia and the Americas in the M777 gun system.

The structures were previously made in Barrow-in-Furness in Britain, with assembly and testing taking place in Hattiesburg, Mississippi.

BAE Systems said the new contract created the “optimum conditions” for a restart of M777 production in the UK. A spokesperson said the company could not say where production would take place.

Australia, Canada and the United States have donated the weapons to Ukraine, the company said.

“This restart of production of the major structures for the U.S. Army’s M777s comes at a critical time, with howitzers deployed on operations in Ukraine,” said John Borton, vice president and general manager of BAE Systems Weapons Systems UK.

BAE Systems said the contract would present an opportunity for new and existing users to join a new M777 production initiative and take advantage of the benefits of a hot production line and economies of scale.

(Reporting by Paul Sandle; editing by Kylie MacLellan and Barbara Lewis)

(Reuters) – U.S. stock index futures slipped on Friday and signaled losses for the first week of 2024 as investors awaited a key jobs report that could test expectations for an early start to the Federal Reserve’s easing cycle.

All three of the major U.S. indexes are set to end the week in the red, with the S&P 500 on track for its worst week since late October, as investors cashed in after a nine-week winning streak driven by bets that aggressive rate cuts were on the horizon.

The Nasdaq was on course for its worst weekly performance since late September, impacted by rotation out of tech-heavy stocks into defensive sectors like healthcare, financials and utilities.

After the recent Fed meeting minutes failed to offer hints on the timeline for monetary easing, traders have dialed back rate cut expectations and now see a 65.7% chance for at least a 25 basis points (bps) rate cut in March, down from nearly 86% a week ago, according to the CME FedWatch Tool.

Yields on U.S. Treasury notes, an indicator of interest rate expectations, ticked higher with the yield on the benchmark 10-year note rising over 4% to a three-week high. [US/]

All eyes are on the official non-farm payrolls report, due at 8:30 a.m. ET, which could offer clues on how long the Fed could keep credit conditions restrictive.

U.S. job growth likely moderated in December, while the increase in annual wages probably slowed to below 4% for the first time in 2-1/2 years.

“Demand for labor is moderating, which top policymakers have indicated will be crucial for hitting its 2% inflation target on a sustained basis,” analysts at UBS wrote.

“The consensus forecast is for a modest rise in the unemployment rate and a slowing of the growth in average earnings.”

At 5:46 a.m. ET, Dow e-minis were down 89 points, or 0.24%, S&P 500 e-minis were down 12.75 points, or 0.27%, and Nasdaq 100 e-minis were down 64 points, or 0.39%.

Among early movers, Tesla shed 1% in trading before the bell. The electric-vehicle maker is doing an effective recall on 1.62 million vehicles in China, the market regulator said.

Other megacap names including Microsoft, Apple and Alphabet lost between 0.1% and 0.7%.

Chipmakers like Micron Technology, Intel and Qualcomm also declined between 1.1% and 1.9%.

Applied Therapeutics tumbled 29% after the drug developer’s heart disease drug showed disappointing results in a late-stage trial.

Later in the day, investors will also parse remarks by Richmond Fed President Thomas Barkin, a voting member this year.

(Reporting by Johann M Cherian in Bengaluru; Editing by Devika Syamnath)