U.S. Stocks May Lack Direction After Monthly Jobs Report

After closing higher for three consecutive sessions, stocks may show a lack of direction in early trading on Friday. The major index futures have shown notable fluctuations following the release of the Labor Department’s closely watched monthly jobs report.

The Labor Department report showed much weaker than expected job growth in the month of September, although the unemployment rate fell to a new pandemic-era low.

The report said non-farm payroll employment rose by 194,000 jobs in September after climbing by an upwardly revised 366,000 jobs in August.

Economists had expected employment to jump by 500,000 jobs compared to the addition of 235,000 jobs originally reported for the previous month.

Despite the much weaker than expected job growth, the unemployment rate fell to 4.8 percent in September from 5.2 percent in August. The unemployment rate was expected to edge down to 5.1 percent.

With the bigger than expected decrease, the unemployment rate dropped to its lowest level since hitting 4.4 percent in March of 2020.

The data may lead to uncertainty about the outlook for monetary policy, as the Federal Reserve has indicated it needs to see further improvement in the labor market before scaling back stimulus.

“The disappointing 194,000 gain in non-farm payrolls in September probably still counts as ‘decent’ enough for the Fed to begin tapering its asset purchases next month,” said Andrew Hunter, Senior US Economist at Capital Economics.

He added, “But alongside signs that activity growth is slowing sharply, at the same time as worsening labor shortages are putting serious upward pressure on wage growth, it looks set to leave Fed officials in an uncomfortable position over the coming months.”

Stocks moved notably higher during trading on Thursday, extending the upward move seen over the course of Wednesday’s session. The major averages closed higher for the third consecutive session following the steep drop seen on Monday.

The major averages pulled back off their best levels in afternoon trading but remained firmly positive. The Dow jumped 337.95 points or 1 percent to 34,754.94, the Nasdaq surged up 152.10 points or 1.1 percent to 14,654.02 and the S&P 500 advanced 36.21 points or 0.8 percent to 4,399.76.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index jumped by 1.3 percent, while China’s Shanghai Composite Index rose by 0.7 percent as trading resumed following a week-long holiday.

Meanwhile, the major European markets have moved to the downside on the day. While the U.K.’s FTSE 100 Index is just below the unchanged line, the German DAX Index is down by 0.2 percent and the French CAC 40 Index is down by 0.4 percent.

In commodities trading, crude oil futures are rising $0.74 to $79.04 a barrel after climbing $0.87 to $78.30 a barrel on Thursday. Meanwhile, after slipping $2.60 to $1,759.20 an ounce in the previous session, gold futures are jumping $17.30 to $1,776.50 an ounce.

On the currency front, the U.S. dollar is trading at 111.64 yen versus the 11.63 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1570 compared to yesterday’s $1.1552.