Futures Pointing To Another Mixed Performance On Wall Street

The major U.S. index futures are currently pointing to a mixed open on Monday, with stocks poised to turn in another mixed performance.

Traders may cash in on recent strength in the markets after the Dow and the S&P 500 ended the previous session at new record closing highs.

The advance by the Dow and the S&P 500 and the drop by the Nasdaq came following the release of better than expected U.S. jobs data.

The closely watched report from the Labor Department added to economic optimism but also raised concerns about the outlook for monetary policy.

Later this week, reports on consumer and producer price inflation may also impact forecasts for when the Federal Reserve will begin scaling back its asset purchases.

After ending Thursday’s trading mostly higher line, the major U.S. indexes turned in a mixed performance during trading on Friday. While the Nasdaq pulled back of Thursday’s record closing high, the Dow and S&P 500 reached new record closing highs.

The Nasdaq fell 59.36 points or 0.4 percent to 14,835.76, but the Dow climbed 144.26 points or 0.4 percent to 35,208.51 and the S&P 500 rose 7.42 points or 0.2 percent to 4,416.56.

Before the start of trading, the Labor Department released a report showing non-farm payroll employment spiked by 943,000 jobs in July after surging by an upwardly revised 938,000 jobs in June.

Economists had expected employment to jump by 870,000 jobs compared to the addition of 850,000 jobs originally reported for the previous month.

The stronger than expected job growth was partly due to sharp increases in employment in leisure and hospitality and local government education, which shot up by 380,000 jobs and 221,000 jobs, respectively.

Reflecting the strong job growth, the unemployment rate slid to 5.4 percent in July from 5.9 percent in June, falling to its lowest level since March of 2020. Economists had expected the unemployment rate to dip to 5.7 percent.

Federal Reserve Chair Jerome Powell recently indicated further progress was needed in the labor market recovery before the central would consider scaling back stimulus.

“We had thought that continued slow progress on the employment recovery would see the Fed hold off tapering its asset purchases until early next year,” said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He continued, “But with Board members Richard Clarida and Christopher Waller both recently suggesting a run of stronger jobs growth would be enough to meet the threshold of ‘substantial further progress,’ the risks may now be titled towards that process beginning sooner than we had expected.”

Banking stocks moved sharply higher on the day, with the KBW Bank Index surging up by 2.6 percent to its best closing level in almost two months.

Significant strength was also visible among oil service stocks, as reflected by the 2.4 percent jump by the Philadelphia Oil Service Index. The strength in the oil service sector came despite a decrease by the price of crude oil.

Brokerage stocks also showed a considerable move to the upside, driving the NYSE Arca Broker/Dealer Index up by 1.7 percent

On the other hand, gold stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 3.8 percent. The sell-off by gold stocks came amid a nosedive by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are tumbling $2.77 to $65.51 barrel after falling $0.81 to $68.28 a barrel last Friday. Meanwhile, after plunging $45.80 to $1,763.10 an ounce in the previous session, gold futures are slumping $20.10 to $1,743 an ounce.

On the currency front, the U.S. dollar is trading at 110.07 yen versus the 110.25 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1767 compared to last Friday’s $1.1762.

Asia

Asian stocks ended mixed on Monday after an upbeat U.S. jobs report lifted bond yields and the dollar. Investors now await July inflation readings and the Jackson Hole meeting for additional clues to the Fed’s thinking on inflation, employment and the interest rate outlook. Japanese markets were closed for the Mountain Day holiday.

Chinese shares rose sharply despite trade data out over the weekend coming in below expectations. Separate data showed consumer inflation slowed to 1 percent in July, offering no barrier to more policy stimulus. Factory-gate inflation surged again to 9 percent in July as commodity prices climbed.

The benchmark Shanghai Composite Index jumped 36.41 points, or 1.1 percent, to 3,494.63, while Hong Kong’s Hang Seng Index ended up 104 points, or 0.4 percent, at 26,283.40.

Australian markets fluctuated before closing on a flat note as central bank governor, Philip Lowe, warned the economy is likely to shrink in the quarter ending in September.

A drop in iron ore prices weighed on the mining sector, with BHP, Fortescue Metals Group and Rio Tinto falling between 0.8 percent and 1.4 percent.

Westpac Banking Corp advanced 1 percent as the country’s second largest lender agreed to sell its domestic life insurance business to Japan’s Dai-ichi Life Holdings. The other three big banks rose between 0.9 percent and 1.4 percent.

Insurer Suncorp Group jumped 7.8 percent after it reported bumper profits for the 2021 financial year. Insurance Australia Group shares surged 4.6 percent.

Evolution Mining, Newcrest and Northern Star Resources lost 2-4 percent as gold prices hit a more than four-month low on concerns of a sooner-than-expected interest rate hike in the U.S.

Seoul stocks fell for the third straight session as strong U.S. jobs figures fueled worries about early tapering. The benchmark Kospi ended a choppy session down 9.94 points, or 0.3 percent, at 3,260.42.

Automaker Hyundai Motor dropped 0.7 percent, pharmaceutical firm Samsung Biologics she 1.1 percent and chipmaker SK Hynix lost 1.7 percent. Kakao Bank shares soared as much as 12.5 percent after the online banking unit of mobile messenger app Kakao Talk went public Friday.

Europe

European stocks are subdued on Monday as concerns about new COVID-related curbs in Asia, especially in China, dent optimism over the economic revival.

Additionally, China’s factory gate inflation in July rose at a faster clip from the previous month, raising concerns that inflation could spike further if lockdowns in parts of the country cause supply problems.

There was some respite on the economic front as new data showed Germany’s exports grew at a faster pace in June despite persistent supply bottlenecks in manufacturing.

Exports grew 1.3 percent month-on-month in June, following May’s revised 0.4 percent increase, Destatis reported. The rate was expected to climb 0.4 percent after 0.3 percent growth initially estimated for May.

Meanwhile, growth in imports eased to 0.6 percent from 3.4 percent. Economists had forecast the annual growth to slow to 0.5 percent.

While the U.K.’s FTSE 100 Index is just below the unchanged line, the German DAX Index is down by 0.1 percent and the French CAC 40 Index is down by 0.3 percent.

BP Plc fell and Royal Dutch Shell have moved notably lower as Brent futures slumped more than 4 percent on concerns about potential global oil demand erosion.

Financial services company Hargreaves Lansdown are also come under pressure after an earnings miss.

Wacker Neuson shares have also tumbled. The German construction company has warned of supply-chain challenges despite reporting an increase in second-quarter profit.

Meanwhile, Vectura shares have jumped after the drug maker received a higher bid from Philip Morris International Inc.

Deliveroo has also soared after German food delivery group Delivery Hero built a 5 percent stake in its U.K. rival. Shares of the German firm have declined.

U.S. Economic Reports

The Labor Department is due to release the results of its Job Openings and Labor Turnover Survey for the month of June at 10 am ET. Economists expect job openings to rise to 9.270 million in June from 9.209 million in May.

At 10:10 am ET, Atlanta Federal Reserve President Raphael Bostic is scheduled to speak on “Building an Inclusive Economy” before a virtual Greater Fort Lauderdale Alliance Foundations Prosperity Partnership event.

Richmond Federal Reserve President Thomas Barkin is due to speak on the economic outlook for Virginia’s Blue Ridge and beyond before an in-person Roanoke Regional Chamber luncheon at 11 am ET.