Futures Turn Positive Following Upbeat Jobs Data

The major U.S. index futures are currently pointing to a modestly higher open on Friday, with the futures turning positive following the release of upbeat jobs data.

Early buying interest may be generated in reaction to a closely watched report from the Labor Department showing stronger than expected job growth in the month of April.

The report showed non-farm payroll employment surged by 428,000 jobs in April, matching the revised jump seen in March.

Economists had expected employment to climb by 391,000 jobs compared to the addition of 431,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate came in unchanged at 3.6 percent versus expectations the rate would edge down to 3.5 percent.

The bigger than expected increase in employment may still generate optimism the economy will be able to withstand the series of interest rate hikes planned by the Federal Reserve.

Some traders may also look to pick up stocks at reduced levels following the sharp pullback seen in the previous session.

Following the rally seen going into the close of Wednesday’s trading, stocks showed a substantial move back to the downside on Thursday. The major averages more than offset Wednesday’s gains, with the tech-heavy Nasdaq plunging to its lowest closing level in well over a year.

The major averages climbed off their worst levels in late-day trading but still posted steep losses. The Dow dove 1,063.09 points or 3.1 percent to 32,997.97, the Nasdaq plummeted 647.16 points or 5 percent to 12,317.69 and the S&P 500 tumbled 153.30 points or 3.6 percent to 4,146.87.

The sell-off on Wall Street came as traders cashed in on the relief rally seen following the Federal Reserve’s monetary policy announcement on Wednesday.

The Federal Reserve raised interest rates by 50 basis points as widely expected, although Fed Chair Jerome Powell was less hawkish than some had feared.

During his post-meeting press conference, Powell said the Fed is not “actively considering” a 75 basis point rate hike, temporarily offsetting worries about the outlook for rates.

However, concerns about higher rates, inflation, the economic outlook and the ongoing war in Ukraine remain, contributing to the sharp pullback on Wall Street.

A sharp increase in treasury yields also weighed on the markets, the yield on the benchmark ten-year note soaring to its highest levels in well over three years.

Traders were also looking ahead to the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect employment to jump by 391,000 jobs in April after surging by 431,000 jobs in March, while the unemployment rate is expected to edge down to 3.5 percent from 3.6 percent.

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

The report showed initial jobless claims rose to 200,000, an increase of 19,000 from the previous week’s revised level of 181,000.

Economists had expected jobless claims to inch up to 182,000 from the 180,000 originally reported for the previous week.

A separate report from the Labor Department showed a substantial pullback in labor productivity in the first quarter of 2022.

The Labor Department said labor productivity plunged by 7.5 percent in the first quarter, reflecting the largest decline since the third quarter of 1947.

Steel stocks turned in some of the market’s worst performances amid concerns about the outlook for global demand, dragging the NYSE Arca Steel Index down by 6 percent to a two-month closing low.

Substantial weakness was also visible among retail stocks, as reflected by the 5.5 percent nosedive by the Dow Jones U.S. Retail Index. The index plunged to its lowest closing level in well over a year.

Online home goods retailer Wayfair (W) showed a particularly steep drop after reporting a wider than expected first quarter loss.

Semiconductor stocks also saw considerable weakness on the day, resulting in a 5 percent slump by the Philadelphia Semiconductor Index.

Housing, airline, computer hardware and biotechnology stocks also showed significant moves to the downside, reflecting broad based selling pressure.

Commodity, Currency Markets

Crude oil futures are jumping $1.39 to $109.65 a barrel after rising $0.45 to $108.26 a barrel on Thursday. Meanwhile, after edging up $6.90 to $1,875.70 an ounce in the previous session, gold futures are climbing $11to $1,886.70 an ounce.

On the currency front, the U.S. dollar is trading at 130.39 yen versus the 130.20 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0578 compared to yesterday’s $1.0542.

Asia

Asian stocks fell sharply on Friday as investors assessed the policy impacts of the Fed’s tightening moves on consumer demand and the broader economy.

On Thursday, the Bank of England warned the U.K. economy will slide into recession this year as a result of higher energy prices.

As inflation worries mount, investors awaited the monthly U.S. jobs data as well as comments by several Fed officials for more clues about the economic outlook.

China’s Shanghai Composite Index tumbled 2.2 percent to 3,001.56 after President Xi Jinping said that the government would “resolutely adhere to” the zero-Covid policy.

Hong Kong’s Hang Seng Index plunged 3.8 percent to 20,001.96 as COVID-19 outbreaks and the Ukraine war threaten growth.

Japan’s Nikkei 225 Index rose 0.7 percent to 27,003.56 as trading resumed after a holiday. Automakers and banks topped the gainers list.

Australia’s benchmark S&P/ASX 200 Index slumped 2.2 percent to 7,205.60, with rate-sensitive tech stocks taking a beating after the Reserve Bank drastically raised inflation forecasts.

New Zealand’s NZX-50 Index dropped 1.2 percent to 11,609.38. South Korea’s Kospi average fell 1.2 percent to 2,644.51, with tech, bio and financial large-caps pacing the declines.

Europe

European stocks have moved notably lower on Friday amid worries aggressive central bank tightening and uncertainty surrounding the war in Ukraine and Covid-19 lockdowns in China will dent economic growth.

German industrial output slumped 3.9 percent month-on-month in March, much bigger than the economists’ forecast of 1.0 percent and reversing February’s revised 0.1 percent uptick, Destatis reported earlier in the day. Year-on-year, industrial production logged a decline of 3.5 percent after rising 3.1 percent in February.

While the German DAX Index is down by 1.2 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both down by 0.9 percent.

British Airways-owner IAG has moved sharply lower after posting another substantial operating loss.

German sportswear firm Adidas has also come under pressure after a warning that its operating profit this year would be lower than previously expected.

Dutch bank ING has also declined after its earnings were hit by hefty provisions at its wholesale banking division.

U.S. Economic Reports

Employment in the U.S. increased by more than expected in the month of April, according to a closely watched report released by the Labor Department on Friday.

The report showed non-farm payroll employment surged by 428,000 jobs in April, matching the revised jump seen in March.

Economists had expected employment to climb by 391,000 jobs compared to the addition of 431,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate came in unchanged at 3.6 percent versus expectations the rate would edge down to 3.5 percent.

At 9:15 am ET, New York Federal Reserve President John Williams is scheduled to give opening remarks before an Environmental Economics and Policy event.

Minneapolis Federal Reserve President Neel Kashkari is due to participate in a fireside chat with Sri Zaheer, Minneapolis Fed board chair and Carlson School dean, at the University of Minnesota Carlson School of Management MBA Reunion at 11 am ET.

At 3 pm ET, the Federal Reserve is scheduled to release its report on consumer credit in the month of March. Consumer credit is expected to increase by $20.0 billion.

Atlanta Federal Reserve President Raphael Bostic is due to speak before the Georgia Tech 2022 Master’s Ceremony Commencement at 3:20 pm ET.

At 7:15 pm ET, Federal Reserve Governor Christopher Waller and St. Louis Federal Reserve President James Bullard are scheduled to speak in a panel discussion at Stanford University’s Hoover Institution.

San Francisco Federal Reserve President Mary Daly is due to give the commencement speech before the spring Class of 2022 at Utah Valley University at 8 pm ET.

Stocks In Focus

Shares of Under Armour (UAA) are moving sharply lower in pre-market trading after the athletic apparel maker reported an unexpected quarterly loss and provided disappointing guidance.

Real estate website operator Zillow Group (ZG) is also seeing significant pre-market weakness after reporting first quarter results that beat estimates but offering a weaker than expected forecast.

Shares of Virgin Galactic (SPCE) may also move to the downside after the spaceflight company delayed the launch of its commercial service until the first quarter of next year.

On the other hand, shares of DraftKings (DKNG) are likely to see initial strength after the online gambling company reported better than expected first quarter revenues and raised its full-year revenue guidance.