Looming Jobs Report May Lead To Choppy Trading On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Thursday, with stocks likely to show a lack of direction.

Traders may be reluctant to make significant moves ahead of the release of the Labor Department’s closely watched monthly employment report on Friday.

Economists currently expect the report to show employment jumped by 490,000 jobs in March after surging by 678,000 jobs in February. The unemployment rate is expected to edge down to 3.7 percent from 3.8 percent.

The jobs data could impact expectations regarding how quickly the Federal Reserve plans to raise interest rates in the month ahead.

A day ahead of the release of the closely watched monthly jobs report, the Labor Department released a report on Thursday showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended March 26th.

The major U.S. averages ended lower on Wednesday amid fading hopes about peace talks between Russia and Ukraine after the former continued to shell certain areas of Ukraine despite having promised to scale down military operations on Tuesday.

Rising worries about inflation and imminent aggressive monetary tightening by the Federal Reserve also weighed on sentiment.

Profit taking after three straight days of gains pushed the Dow to a weak close. The Nasdaq, which scored strong gains in the previous two sessions, ended with a more pronounced loss, as chip stocks fell sharply.

The Dow ended with a loss of 65.38 points or 0.2 percent at 35,228.81, recovering well from a low of 35,058.58 it touched in the final hour. The S&P 500 drifted down 29.15 points or 0.6 percent to close at 4,603.45, while the Nasdaq ended down by 177.36 points or 1.2 percent at 14,442.27.

A report released by payroll processor ADP showed private sector employment in the U.S. jumped by 455,000 jobs in March after surging by an upwardly revised 486,000 jobs in February.

Economists had expected private sector employment to climb by 450,000 jobs compared to the addition of 475,000 jobs originally reported for the previous month.

Data released by the Commerce Department showed the U.S. economy grew by slightly less than previously estimated in the fourth quarter of 2021.

The Commerce Department said real gross domestic product increased by 6.9% in the fourth quarter, reflecting a modest downward revision from the previously estimated 7% spike. Economists had expected GDP growth to be unrevised.

Home Depot shares declined nearly 3 percent. Salesforce.com shares also ended lower by nearly 3 percent. Visa, Intel, Goldman Sachs and Walt Disney declined 1 to 2 percent.

Walmart and United Health Group gained 1.8 percent and 2.1 percent, respectively. Travelers Companies, Johnson & Johnson, Merck and Caterpillar also ended notably higher.

Lululemon Athletica shares gained nearly 10 percent after the company forecast full-year profit and revenue above estimates, as demand for athletic wear remains strong.

Commodity, Currency Markets

Crude oil futures are plunging $5.94 to $101.88 a barrel after surging $3.58 to $107.82 a barrel on Wednesday. Meanwhile, after jumping $21 to $1,939 an ounce in the previous session, gold futures are edging down $1.10 to $1,937.90 an ounce.

On the currency front, the U.S. dollar is trading at 121.70 yen versus the 121.83 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1099 compared to yesterday’s $1.1159.

Asia

Stock markets in Asia mostly ended in the red on Thursday, as sentiment was dampened amidst a drop in China’s PMI readings. Both manufacturing and services PMIs swung to contraction territory amidst a harsh lockdown to combat the Covid-19 outbreak.

China’s Shanghai Composite Index lost 14.39 points or 0.4 percent to finish at 3,252.20. The day’s trading ranged between 3,246.06 and 3,272.04. The Shenzhen Component Index plunged more than a percent to close at 12,118.25.

The NBS Manufacturing PMI fell to 49.5 in March from 50.2 in the previous month, coming in below expectations of 49.9. The NBS Non-Manufacturing PMI suffered a sharper drop to 48.4 in March from the previous reading of 51.6.

The Japanese benchmark Nikkei 225 Index declined 205.82 points or 0.7 percent to end Thursday’s trading at 27,821.43.

Marine transportation business Kawasaki Kisen Kaisha was the top gainer with a 6.7 percent rally. Logistics business Nippon Yusen also gained close to 6 percent. International shipping business Mitsui O.S.K lines added 4.4 percent. Paper manufacturer Oji Holdings gained more than 3 percent.

Pharmaceutical business Kyowa Hakko Kirin declined 4.14 percent. Recruit Holdings, Nippon Express, Tokyu Corp., and Nomura Holdings all shed more than 3 percent.

The Hang Seng Index of the Hong Kong Stock Exchange lost 235.18 points or 1.1 percent from previous close to finish trading at 21,996.85.

Meanwhile, the Korean Stock Exchange’s Kospi Index gained 10.91 points or 0.40 percent to close at 2,757.65. The day’s trading range was between 2,743.20 and 2,765.20.

Australia’s S&P/ASX200 Index closed trading at 7,499.60 after dropping 14.90 points or 0.2 percent. Mining stocks rallied as iron ore and other commodities surge amidst the eastern European conflict.

Novonix Ltd. which supplies battery materials and services to the lithium-ion battery market in North America, was the lead gainer with a rally of close to 10 percent, amidst expectations that the electric vehicle segment would keep the lithium prices high.

Champion Iron added 5 percent on Thursday. Mineral Resources, Fortescue Metals Group, and telecommunications service TPG Telcom all gained more than 4 percent.

Retailer Harvey Norman Holdings was the greatest laggard with a more than 6 percent decline as its shares traded without the right to the latest dividend.

Capital goods business Reece Ltd, software business Xero, and retail business Premier Investments all declined more than 4 percent. Pharmaceutical company Imugene dropped more than 3 percent.

Europe

European stocks are trading lower on Thursday, the last day of March. Energy stocks were hit following reports that U.S. President Joe Biden’s administration is considering a massive release of crude from U.S. reserves to fight inflation.

Investors continue to be concerned about the geopolitical crisis in Europe amid ongoing attacks and the fears of a fresh offensive in eastern Ukraine.

As per reports, the Biden administration is preparing a plan to release 1 million barrels of oil per day for about six months from the strategic petroleum reserve.

While the French CAC 40 Index has fallen by 0.4 percent, the German DAX Index and the U.K.’s FTSE 100 Index are both down by 0.3 percent.

In France, flash data from the statistical office Insee showed that the country’s harmonized inflation hit a fresh record high in March, largely driven by energy prices.

German retail sales grew in February for the first time in three months, albeit at a slower-than-expected pace. Further, data from Destatis showed that Germany’s unemployment rate remained unchanged in February.

According to data published by the Central Bureau of Statistics in the Netherlands, retail sales in the country increased at a softer pace in February amid a decline in food sales.

In the corporate space, H & M Hennes & Mauritz AB has moved sharply lower. The Swedish apparel manufacturer reported a profit in its first quarter, compared to last year’s loss with strong sales. However, its profit was lower than analysts’ estimates and sales growth slowed down following the war in Ukraine.

German real estate business Deutsche Wohnen SE stock also shown a notable move to the downside after reporting weak profit in its fiscal 2021.

Solar energy equipment supplier SMA Solar Technology AG has edged higher despite reporting a loss in fiscal 2021, a reversal from last year’s profit. The company also warned about first-quarter results.

Gerry Weber International AG shares have gained after the German fashion manufacturer and retailer reported preliminary fiscal 2021 normalized consolidated EBITDA significantly above the original forecast of a negative low double-digit million figure.

In U.K., Provident Financial plc is trading higher after reporting a profit in fiscal 2021 compared to last year’s loss.

Euromoney Institutional Investor PLC has also risen. The company said it delivered further strong revenue growth during the second quarter and that it remains well placed to deliver full-year results in line with the Board’s expectations.

Tate & Lyle PLC has also gained after the supplier of food and beverage ingredients said it signed an agreement to acquire Chinese dietary fibre business China’s Quantum Hi-Tech (Guangdong) Biological Co., Ltd for a total cash consideration of $237 million.

U.S. Economic Reports

A day ahead of the release of the closely watched monthly jobs report, the Labor Department released a report on Thursday showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended March 26th.

The report showed initial jobless claims edged up to 202,000, an increase of 14,000 from the previous week’s revised level of 188,000.

Economists had expected jobless claims to inch up to 197,000 from the 187,000 originally reported for the previous week.

The figure originally reported for the previous week reflected the lowest number of jobless claims since September of 1969.

The Commerce Department also released a report showing personal income in the U.S. increased in line with economist estimates in the month of February.

The report showed personal income rose by 0.5 percent in February after inching up by a revised 0.1 percent in January.

Economists had expected personal income to climb by 0.5 percent compared to the unchanged reading originally reported for the previous month.

Meanwhile, the Commerce Department said personal spending edged up by 0.2 percent in February after surging by an upwardly revised 2.7 percent in January.

Personal spending was expected to increase by 0.5 percent compared to the 2.1 percent jump originally reported for the previous month.

A reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth accelerated to 5.4 percent in February from 5.2 percent in January.

At 9 am ET, New York Federal Reserve President John Williams is scheduled to give opening remarks before a hybrid The Future of New York City: Charting an Equitable Recovery for All event.

MNI Indicators is due to release its report on Chicago-area business activity in the month of March at 9:45 am ET. The Chicago business barometer is expected to inch up to 57.0 in March from 56.3 in February, with a reading above 50 indicating growth.

Stocks In Focus

Shares of HP Inc. (HPQ) are seeing notable pre-market weakness after Morgan Stanley downgraded its rating on the computer maker to Underweight from Equal-Weight.

Chipmaker Advanced Micro Devices (AMD) may also move to the downside after Barclays lowered its rating on the company’s stock to Equal-Weight from Overweight.

Shares of Walgreens Boots Alliance (WBA) are also move lower in pre-market trading even though the drugstore operator reported fiscal second quarter results that exceeded analyst estimates.