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 after climbing to new record highs in the previous session.

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

Economists currently expect employment to jump by 200,000 jobs in November after inching up by 12,000 jobs in October, while the unemployment rate is expected to tick up to 4.2 percent from 4.1 percent.

The jobs data could impact the outlook for interest rates ahead of the Federal Reserve’s next monetary policy meeting later this month.

While traders have recently expressed greater confidence the Fed will lower rates by another 25 basis points at the December meeting, there remains uncertainty about the likelihood of continued rate cuts at future meetings.

With the monthly jobs report looming, the Labor Department released a report this morning showing a modest increase by first-time claims for U.S. unemployment benefits in the week ended November 30th.

Following the lackluster performance seen during Tuesday’s session, stocks moved mostly higher over the course of the trading day on Wednesday. The major averages all climbed to new record closing highs after ending mixed for two straight days.

The tech-heavy Nasdaq led the way higher, jumping by 254.21 points or 1.3 percent to 19,735.16. The Dow also advanced 308.51 points or 0.7 percent to 45,014.04, while the S&P 500 climbed 36.61 points or 0.6 percent to 6,086.49.

The rebound by the Dow came amid a sharp increase by shares of Salesforce (CRM), with the enterprise software company surging by 11.0 percent after reporting better than expected fiscal third quarter revenues.

Chipmaker Marvell Technology (MRVL) also soared by 23.2 percent after reporting fiscal third quarter results that exceeded estimates, contributing to strength in the tech sector.

Optimism about the outlook for interest rates also contributed to the strength on Wall Street following the release of some weaker than expected U.S. economic data.

Payroll processor ADP released a report showing private sector employment in the U.S. increased by slightly less than expected in the month of November.

ADP said private sector employment climbed by 146,000 jobs in November after jumping by a downwardly revised 184,000 jobs in October.

Economists had expected private sector employment to grow by 165,000 jobs compared to the surge of 233,000 jobs originally reported for the previous month.

A separate report released by the Institute for Supply Management showed U.S. service sector growth slowed by more than anticipated in the month of November.

The ISM said its services PMI fell to 52.1 in November from 56.0 in October. While a reading above 50 still indicates growth, economists had expected the index to show a much more modest decrease to 55.5.

Following the data, CME Group’s FedWatch Tool is indicating a 75.5 percent chance the Federal Reserve will lower interest rates by 25 basis points later this month.

During remarks later in the afternoon, Fed Chair Jerome Powell reiterated the central bank would take a cautious approach to cutting rates due to the continued strength of the economy.

Airline stocks moved sharply higher over the course of the trading session, with the NYSE Arca Airline Index soaring by 2.9 percent.

Substantial strength was also visible among computer hardware stocks, as reflected by the 2.8 percent surge by the NYSE Arca Computer Hardware Index.

Pure Storage (PSTG) helped lead the sector higher, spiking by 22.1 percent after reporting better than expected fiscal third quarter results.

Software, semiconductor and biotechnology stocks also saw considerable strength, contributing to the jump by the tech-heavy Nasdaq.

On the other hand, energy stocks moved sharply lower along with the price of crude oil, while housing stocks also saw notable weakness.

Commodity, Currency Markets

Crude oil futures are inching up $0.14 to $68.68 a barrel after tumbling $1.40 to $68.54 a barrel on Wednesday. Meanwhile, after rising $8.30 to $2,676.20 an ounce in the previous session, gold futures are slipping $5.20 to $2,671 an ounce.

On the currency front, the U.S. dollar is trading at 150.56 yen versus the 150.59 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0554 compared to yesterday’s $1.0511.

Asia

Asian stocks ended mixed on Thursday as traders took stock of the political crises in France and South Korea as well as comments by Federal Reserve Chair Jerome Powell indicating that the U.S. central bank will cut rates again when it meets later this month.

Chinese shares ended modestly higher as investors awaited cues from an upcoming annual policy meeting that could roll out new stimulus measures.

The benchmark Shanghai Composite Index inched up 0.1 percent to 3,368.86, while Hong Kong’s Hang Seng Index fell 0.9 percent to 19,560.44.

Japanese stocks rose to extend gains for a fourth day running as tech stocks tracked their U.S. peers higher. The Nikkei 225 Index ended the session up 0.3 percent at 339,395.60, paring some initial gains. The broader Topix Index settled marginally higher at 2,742.24. Advantest surged 3.4 percent and SoftBank Group added 1.2 percent.

The yen saw modest gains amid expectations for a Bank of Japan interest-rate hike this month.

Seoul stocks extended losses from the previous session as opposition parties moved to impeach President Yoon Suk Yeol after the short-lived martial law declaration that stunned the nation. The Kospi slid 0.9 percent to 2,441.85.

Automaker Hyundai Motor and leading battery maker LG Energy Solution both fell around 2 percent, while market behemoth Samsung Electronics rose 1.1 percent and No. 2 chipmaker SK Hynix rallied 3 percent.

Australian markets advanced, led by gold miners and technology companies. The benchmark S&P/ASX 200 Index edged up by 0.2 percent to 8,474.90, while the broader All Ordinaries Index settled 0.2 percent higher at 8,744.50.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index finished marginally higher at 12,896.95.

Europe

European stocks hovered near one-month highs on Thursday as President Emmanuel Macron seeks a way out of France’s political crisis.

Prime Minister Michel Barnier is set to resign after being ousted in a no-confidence vote over a budget dispute. That makes him the shortest serving prime minister in modern French history.

It is likely that the country will remain without a government for several weeks, if not months, until Macron appoints a new prime minister, who will have to form a new government.

The State budget and the social security budget for 2025 will not be voted on, but the constitution allows special measures that would avert a U.S.-style government shutdown.

The pan European STOXX 600 Index up by 0.1 percent at 518.02 after rising 0.4 percent on Wednesday.

The French CAC 40 Index is also up by 0.1 percent and the German DAX Index is up by 0.3 percent, although the U.K.’s FTSE 100 Index is down by 0.1 percent.

Shell fell while Equinor rose after they announced plans to merge their British offshore oil and gas assets, creating what will become the U.K.’s largest independent energy company.

Unibail-Rodamco-Westfield SE, a French real estate company, has risen after it acquired a 38.9 percent stake in URW Germany GmbH and its related entities from its joint venture partner Canada Pension Plan Investment Board in an off-market transaction.

Vodafone shares have also moved to the upside in London after the country’s antitrust authority approved the company’s $19 billion merger with Hutchison’s Three UK.

Paper and packaging firm DS Smith has fallen after reporting declines in half-year revenue and profits.

Frasers Group has plummeted as the sportswear and fashion retailer lowered the upper end of its full-year profit forecasts.

French aircraft equipment manufacturer Safran SA has also plunged after issuing new financial targets.

Banks BNP Paribas, Credit Agricole and Societe Generale have climbed on hopes that the government can avoid a shutdown.

Aurubis AG shares have surged after the German supplier of non-ferrous metals and copper recycler reported robust full-year results in a volatile market environment.

U.S. Economic News

A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report on Thursday showing a modest increase by first-time claims for U.S. unemployment benefits in the week ended November 30th.

The report said initial jobless claims rose to 224,000, an increase of 9,000 from the previous week’s revised level of 215,000.

Economists had expected jobless claims to inch up to 215,000 from the 213,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also crept up to 218,250, an increase of 750 from the previous week’s revised average of 217,500.

Reflecting a steep drop by the value of imports, the Commerce Department also released a report on Thursday showing the U.S. trade deficit narrowed by slightly more than expected in the month of October.

The Commerce Department said the trade deficit shrank to $73.8 billion in October from a revised $83.8 billion in September.

Economists had expected the trade deficit to decrease to $75.0 billion from the $84.4 billion originally reported for the previous month.

The narrower trade deficit came as the value of imports tumbled by 4.0 percent to $339.6 billion, although the value of exports also slumped by 1.6 percent to $265.7 billion.

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

Richmond Federal Reserve President Thomas Barkin is due to speak before a Charlotte Regional Business Alliance 2024 Economic Outlook event at 12:15 pm ET.