Strong Jobs Data May Generate Early Buying Interest On Wall Street

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to add to the gains posted in the previous session.

Early buying interest may be generated in reaction to a closely watched report from the Labor Department showing a continued reacceleration in the pace of U.S. job growth in the month of June.

The report showed non-farm payroll employment spiked by 850,000 jobs in June after surging by an upwardly revised 583,000 jobs in May.

Economists had expected employment to jump by about 700,000 jobs compared to the addition of 559,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate unexpectedly inched up to 5.9 percent in June from 5.8 percent in May. The unemployment rate was expected to edge down to 5.7 percent.

The stronger than expected job growth paints a positive picture of the gradually reopening economy but is not seen as likely to significantly alter the Federal Reserve’s timeline for tightening monetary policy.

A separate report from the Commerce Department showed the U.S. trade deficit widened roughly in line with estimates in the month of May.

Stocks turned in a mixed performance for a large chunk of the trading session on Thursday but managed to close mostly higher. With the upward move on the day, the S&P 500 reached another new record closing high.

The major averages all closed in positive territory, although the tech-heavy Nasdaq inched up just 18.42 points or 0.1 percent to 14,522.38. The Dow rose 131.02 points or 0.4 percent to 34,633.53 and the S&P 500 climbed 22.44 points or 0.5 percent to 4,319.94.

A day ahead of the release of the monthly jobs report, the Labor Department released a report showing first-time claims for U.S. unemployment benefits fell by more than expected in the week ended June 26th.

The report said initial jobless claims slid to 364,000, a decrease of 51,000 from the previous week’s revised level of 415,000.

Economist had expected jobless claims to dip to 393,000 from the 411,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

Meanwhile, a separate report released by the Institute for Supply Management showed a modest slowdown in the pace of growth in U.S. manufacturing activity in the month of June.

The ISM said its manufacturing PMI slipped to 60.6 in June from 61.2 in May, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to 61.0.

The Commerce Department also released a report showing an unexpected decrease in construction spending in the month of May.

Energy stocks showed a substantial move to the upside on the day, benefiting from a sharp increase by the price of crude oil.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index surged up by 3.7 percent and the NYSE Arca Oil Index jumped by 2.2 percent.

Significant strength also emerged among airline stocks, as reflected by the 1.4 percent gain posted by the NYSE Arca Airline Index.

Housing stocks also turned in a strong performance on the day, resulting in a 1.2 percent advance by the Philadelphia Housing Sector Index.

On the other hand, semiconductor stocks came under pressure over the course of the session, dragging the Philadelphia Semiconductor Index down by 1.5 percent. The index pulled back further off Tuesday’s record closing high.

Micron Technology (MU) helped lead the sector lower despite reporting better than expected quarterly results and provided upbeat guidance.

Commodity, Currency Markets

Crude oil futures are slipping $0.13 to $75.10 a barrel after spiking $1.76 to $75.23 a barrel on Thursday. Meanwhile, after rising $5.20 to $1,776.80 an ounce in the previous session, gold futures are climbing $10.80 to $1,787.60 an ounce.

On the currency front, the U.S. dollar is trading at 111.39 yen versus the 111.53 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1830 compared to yesterday’s $1.1850.

Asia

Asian stock markets closed trading on a mixed note on Friday, with modest advances recorded by key regional benchmarks including Japan’s Nikkei 225 Index and Australia’s S&P/ASX 200 Index.

It was weak sentiment elsewhere. China’s Shanghai Composite Index, Hong Kong’s Hang Seng Index, and South Korea’s Kospi closed trading on the last day of the week in negative territory.

Despite local cues, trading sentiment in the region mostly lay anchored around progress in virus fights and the likely pace of normalization from a pandemic induced ultra-loose monetary policy.

China’s Shanghai Composite Index sank 70.02 points or 2 percent to close at 3,518.76, as recent political comments by Chinese officials dampened trading sentiment already impacted by anxiety ahead of crucial jobs data from the U.S.

Hong Kong stocks followed their mainland peers lower, with the Hang Seng Index tumbling 517.53 points or 1.8 percent to close at 28,310.42.

Meanwhile, Japan’s Nikkei 225 Index added 76.24 points or 0.3 percent to finish Friday’s trading at 28,783.28. Mazda Motor was the top gainer with a jump of 6.5 percent. Mitsui Engineering and Shipbuilding moved up by 5.1 percent, while Sony Corp. advanced 3.7 percent.

Nikon Corp. topped the trailers list with an erosion of 2.9 percent followed by Tokyo Electron, which lost 2.1 percent.

South Korea’s Kospi edged down 0.28 points or 0.01 percent to close at 3,281.78 as investors weighed the spikes in coronavirus infections and declines in annual and monthly inflation numbers. Annual inflation decreased to 2.4 percent in June from 2.6 percent in May and the forecast of 2.59 percent.

Australia’s S&P/ASX 200 Index closed Friday’s trade with a gain of 43.00 points or 0.6 percent at the level of 7,308.60 as the government announced a vaccine-milestone-linked four-phase reopening scheme. The index’s current level is 1.3 percent below its 52-week high.

IDP Education rallied 20.3 percent following the announcement of the acquisition of British Council’s Indian IELTS operations. The A2 Milk Company surged up 5.2 percent after appointing a new Chief Marketing Officer. IPH slumped 5.3 percent following a proposal to issue ordinary shares.

Europe

European stocks have moved mostly higher during trading on Friday, extending the rebound seen over the course of the previous session.

The markets have maintained a positive bias following the release of closely watched U.S. employment data showing stronger than expected job growth in the month of June.

Investors are also weighing the extent of delta variant spread in the region as more and countries finalized plans to accommodate travelers without compromising on health standards.

While the German DAX Index has risen by 0.5 percent, the U.K.’s FTSE 100 Index is up by 0.2 percent and the French CAC 40 Index is up by 0.1 percent.

In economic news, Eurozone producer prices increased at a faster pace in May, driven by a surge in energy cost, data from Eurostat showed.

Industrial producer prices were up 9.6 percent year-on-year following a 7.6 percent rise in April. Economists had forecast an annual increase of 9.5 percent.

U.S. Economic Reports

Reflecting the gradual reopening of the economy, the Labor Department released a report on Friday showing a continued reacceleration in the pace of U.S. job growth in the month of June.

The report showed non-farm payroll employment spiked by 850,000 jobs in June after surging by an upwardly revised 583,000 jobs in May.

Economists had expected employment to jump by about 700,000 jobs compared to the addition of 559,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate unexpectedly inched up to 5.9 percent in June from 5.8 percent in May. The unemployment rate was expected to edge down to 5.7 percent.

A separate report from the Commerce Department showed the U.S. trade deficit widened roughly in line with estimates in the month of May.

The Commerce Department said the trade deficit widened to $71.2 billion in May from a revised $69.1 billion in April.

Economists had expected the trade deficit to widen $71.4 billion from the $68.9 billion originally reported for the previous month.

The wider trade deficit came as the value of imports jumped by 1.3 percent to $277.3 billion, while the value of exports rose by 0.6 percent to $206.0 billion.

At 10 am ET, the Commerce Department is scheduled to release its report on factory orders in the month of May. Factory orders are expected to jump by 1.5 percent in May after falling by 0.6 percent in April.

Stocks In Focus

Shares of Virgin Galactic (SPCE) are skyrocketing in pre-market trading after the space travel company announced founder Richard Branson plans to be aboard a planned July 11 space flight.

Banking company PNC Financial (PNC) may also move to the upside after Wolfe Research upgraded its rating on the company’s stock to Outperform from Underperform.

On the other hand, shares of Krispy Kreme (DNUT) are poised to give back ground after spiking 23.5 percent in the donut chain’s return to public trading on Thursday.