Futures Pointing To Early Weakness On Wall Street Following Jobs Data

The major U.S. index futures are currently pointing to a lower open on Friday, with stocks likely to see initial weakness after turning in mixed performances over the two previous sessions.

Concerns about the outlook for the U.S. economy may weigh on the markets after the Labor Department released a report showing employment rose by less than expected in the month of August.

The Labor Department said non-farm payroll employment climbed by 142,000 jobs in August compared to economist estimates for an increase of 160,000 jobs.

The report also said the increases in employment in June in July were downwardly revised to 118,000 jobs and 89,000 jobs, respectively, reflecting a net downward revision of 86,000 jobs.

Meanwhile, the Labor Department said the unemployment rate edged down to 4.2 percent in August from 4.3 percent in July.

The modest decrease, which was in line with estimates, came after the unemployment rate reached its highest level since October 2021.

Selling pressure may be somewhat subdued, however, as the weaker than expected job growth may lead to optimism about accelerated interest rate cuts by the Federal Reserve.

After ending Wednesday’s lackluster session narrowly mixed, the major U.S. stock indexes turned in another mixed performance during trading on Thursday. While the S&P 500 closed lower for the third straight session, the tech-heavy Nasdaq ended the day in positive territory.

The Nasdaq bounced back and forth across the unchanged line before eventually closing up 43.37 points or 0.3 percent at 17,127.66. Meanwhile, the S&P 500 fell 16.66 points or 0.3 percent to 5,503.41 and the Dow slid 219.22 points or 0.5 percent to 40,755.75.

The mixed performance on Wall Street came following the release of mixed readings on employment ahead of the release of the closely watched monthly jobs report on Friday.

Before the start of trading, payroll processor ADP released a report showing private sector employment in the U.S. increased by much less than expected in the month of August.

ADP said private sector employment rose by 99,000 jobs in August after climbing by a downwardly revised 111,000 jobs in July.

Economists had expected private sector employment to jump by 145,000 jobs compared to the addition of 122,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department released a separate report showing a modest decrease by first-time claims for U.S. unemployment benefits in the week ended August 31st.

The report said initial jobless claims dipped to 227,000, a decrease of 5,000 from the previous week’s revised level of 232,000.

Economists had expected jobless claims to edge down to 230,000 from the 231,000 originally reported for the previous week.

While most of the major sectors showed only modest moves on the day, pharmaceutical stocks saw considerable weakness, dragging the NYSE Arca Pharmaceutical Index down by 1.9 percent.

Healthcare, computer hardware and oil producer stocks also showed notable moves to the downside, while airline stocks saw significant strength.

Reflecting the strength in the airline sector, the NYSE Arca Airline Index jumped by 1.9 percent to its best closing level in a month.

JetBlue (JBLU) helped lead the sector higher, with the airline soaring by 7.2 percent after raising its third quarter revenue guidance.

Commodity, Currency Markets

Crude oil futures are rising $0.58 to $69.73 a barrel after edging down $0.05 to $69.15 a barrel on Thursday. Meanwhile, after climbing $17.10 to $2,543.10 an ounce in the previous session, gold futures are increasing $11.20 to $2,554.30 an ounce.

On the currency front, the U.S. dollar is trading at 142.48 yen versus the 143.45 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1131 compared to yesterday’s $1.1111.

Asia

Asian shares ended mostly lower on Friday as investors awaited key U.S. jobs data later in the day that could influence the pace and magnitude of rate cuts by the Federal Reserve in the remaining months of 2024.

The dollar lingered near a one-month low versus the yen after data showed U.S. private sector job growth slumped to a 3-1/2-year low in August.

Gold edged up slightly on dollar weakness, while oil prices were set for deep weekly losses on persistent concerns about soft demand and signs of ample supply.

China’s Shanghai Composite Index slid 0.8 percent to 2,765.81 after Zou Lan, head of the Chinese central bank’s monetary policy department, said there is room to lower reserve requirement rations but interest rate cuts are limited by constraints. Trade on Hong Kong’s stock market was cancelled due to a typhoon alert.

Japanese stocks fell as a stronger yen weighed on the outlook for exports. The Nikkei 225 Index declined 0.7 percent to 36,391.47 to extend losses for a fourth consecutive session and close at a fresh three-week low as data showed Japanese household spending rose less than expected in July.

The broader Topix Index slumped 0.9 percent to 2,597.42, with machinery, iron and steel, and electric appliance issues pacing the declines.

Seoul stocks tumbled, with the Kospi falling 1.2 percent to 2,544.28 as tech stocks such as SK Hynix took a hit on concerns about the U.S. economic outlook.

Australian markets eked out modest gains, with financials, consumer discretionary and consumer staple stocks leading the way higher. Energy stocks underperformed as crude oil prices lingered near a 14-month low.

The benchmark S&P/ASX 200 Index rose 0.4 percent to 8,013.40, while the broader All Ordinaries Index closed 0.3 percent higher at 8,214.80.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index dropped half a percent to 12,615.51.

Europe

European stocks have moved mostly lower on Friday, extending declines for a fifth day running, as traders react to the closely watched U.S. jobs data.

While the German DAX Index is down by 0.5 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both down by 0.2 percent.

Energy stocks have underperformed as crude prices linger near a 14-month low on demand concerns.

Camellia, engrained in agriculture and engineering business, has also slumped after it reported a loss before tax from continuing operations of 11 million pounds for the first half.

Berkeley Group Holdings has also declined. The homebuilder backed its full-year guidance and said trading in the first four months of the year has been stable.

Airbus has also moved lower in Paris as Europe’s air safety regulator ordered one-off inspections of some engines on its A350-1000 jets following an engine fire on a Cathay Pacific flight earlier this week.

French workspace supplies provider Elis SA has plummeted after it approached Vestis, the former uniform rentals business of Aramark, with an acquisition offer.

U.S. Economic Reports

Employment in the U.S. rose by less than expected in the month of August, according to a closely watched report released by the Labor Department on Friday.

The Labor Department said non-farm payroll employment climbed by 142,000 jobs in August compared to economist estimates for an increase of 160,000 jobs.

The report also said the increases in employment in June in July were downwardly revised to 118,000 jobs and 89,000 jobs, respectively, reflecting a net downward revision of 86,000 jobs.

Meanwhile, the Labor Department said the unemployment rate edged down to 4.2 percent in August from 4.3 percent in July.

The modest decrease, which was in line with estimates, came after the unemployment rate reached its highest level since October 2021.

At 11 am ET, Federal Reserve Board Governor Christopher Waller is scheduled to speak on the economic outlook at an event hosted by the University of Notre Dame.