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, as traders look ahead to the monthly jobs report.

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

Economists currently expect the report to show employment increased by 240,000 jobs in March after climbing by 311,000 jobs in February. The unemployment rate is expected to hold at 3.6 percent.

The data could impact the outlook for interest rates and the economy, although traders will have to wait to react to the report, as the U.S. stock markets will be closed for Good Friday.

With the monthly jobs report looming, the Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits declined from an upwardly revised level in the week ended April 1st.

Following the weakness seen in Tuesday’s previous session, the major U.S. stock indexes turned in a mixed performance during trading on Wednesday.

While the Dow rose 80.34 points or 0.2 percent to 33,482.72, the S&P 500 spent the day in negative territory before closing down 10.22 points or 0.3 percent to 4,090.38.

The tech-heavy Nasdaq showed a more significant move to the downside, slumping 129.47 points or 1.1 percent to 11,996.86 and pulling back further off last Friday’s six-month closing high.

The uptick by the Dow was partly due to a strong gain by shares of Johnson & Johnson (JNJ), with the healthcare giant surging by 4.5 percent.

The jump by J&J came after the company announced it has agreed to pay $8.9 billion over 25 years to settle claims that the talc in its baby powder and other products caused cancer.

Other healthcare-related Dow components like UnitedHealth (UNH), Merck (MRK) and Amgen (AMGN) are also posting notable gains.

Meanwhile, concerns about the economic outlook weighed on the Nasdaq and the S&P 500 following the release of disappointing data.

Payroll processor ADP released a report before the start of trading showing private sector employment increased by less than expected in the month of March.

ADP said private sector employment rose by 145,000 jobs in March after climbing by an upwardly revised 261,000 jobs in February.

Economists had expected private sector employment to advance by 200,000 jobs compared to the addition of 242,000 jobs originally reported for the previous month.

“Our March payroll data is one of several signals that the economy is slowing,” said ADP chief economist Nela Richardson. “Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down.”

A separate report released by the Institute for Supply Management showed growth in U.S. service sector activity slowed by much more than expected in the month of March.

The ISM said its services PMI slid to 51.2 in March from 55.1 in February. While a reading above 50 still indicates growth in the sector, economists had expected the index to show a much more modest decrease to 54.5.

Brokerage stocks showed a significant move to the downside on the day, dragging the NYSE Arca Broker/Dealer Index down by 1.9 percent.

Considerable weakness was also visible among semiconductor stocks, as reflected by the 1.8 percent drop by the Philadelphia Semiconductor Index.

The semiconductor index continued to give back ground after ending last Friday’s trading at its best closing level in almost a year.

Airline, retail and software stocks also saw notable weakness, while utilities stocks moved sharply higher, driving the Dow Jones Utility Average up by 2.6 percent to a two-month closing high.

The jump by shares of Johnson & Johnson also contributed to strength in the pharmaceutical sector, with the NYSE Arca Pharmaceutical Index climbing by 1.8 percent to its best intraday level in three months.

Commodity, Currency Markets

Crude oil futures are unchanged after edging down $0.10 to $80.61 a barrel on Wednesday. Meanwhile, after edging down $2.60 to $2,035.60 an ounce in the previous session, gold futures are slipping $4.60 to $2,031 an ounce.

On the currency front, the U.S. dollar is trading at 131.55 yen versus the 131.32 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0901 compared to yesterday’s $1.0904.

Asia

Asian stocks moved mostly lower during trading on Thursday as another round of weak U.S. data fueled worries of a U.S. recession.

U.S. private employers hired far fewer workers than expected in March and growth in the country’s service sector activity slowed by much more than expected in the month, adding to the gloom surrounding the economic outlook.

With many global markets likely to remain closed on Good Friday, investors avoided taking big positions ahead of the long weekend.

Chinese shares fluctuated before ending little changed with a negative bias. The downside was capped after a private survey showed activity in China’s services sector grew at the fastest pace in two and a half years in March on robust new orders and job creation.

Hong Kong’s Hang Seng Index closed 0.3 percent higher at 20,331.20 after a choppy session.

Japanese shares fell sharply to reach two-week lows after the yen gained overnight, leading to a sell-off in export-oriented stocks. The Nikkei 225 Index slumped 1.1 percent to 27,507.65, while the broader Topix closed 0.9 percent lower at 1,965.74.

Automaker Mazda Motor led losses to close 5 percent lower, while chip-making equipment maker Tokyo Electron lost 4.5 percent. Utilities outperformed, with Tokyo Electric Power Holdings jumping 2.3 percent.

Seoul stocks tumbled as tech shares suffered heavy losses on signs of a weakening U.S. economy and growing recession fears. The Kospi tumbled 1.4 percent to 2,459.23.

SK Hynix, LG Energy Solution and Samsung Electronics dropped 1-2 percent, while Samsung Biologics rallied 2.2 percent.

Australian markets snapped a seven-session winning streak, dragged down by technology and real estate stocks. The benchmark S&P/ASX 200 Index slipped 0.3 percent to 7,214.90, while the broader All Ordinaries Index settled 0.4 percent lower at 7,407.50.

Indian shares saw modest gains after the Reserve Bank of India (RBI) unexpectedly kept interest rates unchanged.

Europe

European stocks are moving higher on Thursday, with encouraging regional data and expectations of a pause in rate hikes by the Federal Reserve helping underpin investor sentiment ahead of Good Friday and Easter holidays.

In economic news, official data showed German industrial output grew 2.0 percent on a monthly basis in February, faster than economists’ forecast of 0.1 percent.

On a yearly basis, industrial production climbed 0.6 percent, in contrast to the 1.6 percent decrease in January.

U.K. house prices rose for a third month in a row in March, defying expectations and reflecting the resilience of the housing market, Lloyds Bank subsidiary Halifax said.

The house price index climbed 0.8 percent month-on-month following a 1.2 percent increase in each of the two previous months. Economists were looking for a 0.3 percent fall.

While the U.K.’s FTSE 100 Index has advanced by 0.7 percent, the German DAX Index is up by 0.3 percent and the French CAC 40 Index is up by 0.2 percent.

Shell has rallied in London after the oil and gas giant said it expects higher liquefied natural gas (LNG) output in the first quarter.

Temenos AG has also moved to the upside on reports that the Swiss banking software group is seeking fresh interest from private equity firms.

Lender Credit Suisse has edged up slightly after winning a $41 million lawsuit against a Saudi royal family member over a loan to refinance a super yacht after London’s High Court ruling.

Meanwhile, Robert Walters has slumped after it reported flat profit in the first quarter of 2023 amidst the uncertain global macro-economic conditions.

Gerresheimer AG, a maker of packaging products for medication and drug delivery devices, has also fallen despite reporting higher quarterly earnings and backing its 2023 view.

U.S. Economic Reports

With the more closely watched monthly jobs report looming, the Labor Department released a report on Thursday showing first-time claims for U.S. unemployment benefits declined from an upwardly revised level in the week ended April 1st.

The Labor Department said initial jobless claims fell to 228,000, a decrease of 18,000 from the previous week’s revised level of 246,000.

Economists had expected initial jobless claims to inch up to 200,000 from the 198,000 originally reported for the previous week.

The report said the less volatile four-week moving average also dipped to 237,750, a decrease of 4,250 from the previous week’s revised average of 242,000.

The Labor Department noted that beginning with the latest data, the methodology used to seasonally adjust the national initial claims and continued claims reflects a change in the estimation of the models.

At 10 am ET, St. Louis Federal Reserve President James Bullard is due to give a presentation on the U.S. economy and monetary policy before the Arkansas State Bank Department’s Day with the Commissioner event.

The Treasury Department is scheduled to announce the details of this month’s auctions three-year and ten-year notes and thirty-year bonds at 11 am ET.

Stocks In Focus

Shares of Levi Strauss (LEVI) are moving sharply lower in pre-market trading after the clothing company reported better than expected fiscal first quarter results but CFO Harmit Singh said its full-year guidance reflects a “cautious outlook on the macro-environment.”

Retailer Costco (COST) may also move to the downside after reporting a 1.1 percent year-over-year decrease in comparable sales in the month of March. Excluding the impacts from changes in gasoline prices and foreign exchange, comparable sales rose 0.9 percent, reflecting the slowest growth in almost three years.

On the other hand, shares of Pinterest (PINS) may move to the upside after Raymond James initiated coverage of the image sharing and social media service’s stock with an Outperform rating.