Futures Pointing To Higher Open Following Monthly Jobs Report

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to extend the rebound seen over the course of the previous session.

The upward momentum on Wall Street comes following the release of a report from the Labor Department showing employment increased roughly in line with economist estimates in the month of August.

The report showed non-farm payroll employment rose by 315,000 jobs in August after surging by a revised 526,000 jobs in July.

Economists had expected employment to increase by about 300,000 jobs compared to the jump of 528,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate edged up to 3.7 percent in August from 3.5 percent in July. Economists had expected the unemployment rate to remain unchanged.

Following another sell-off early in the session, stocks showed a substantial turnaround over the course of the trading day on Thursday. The major averages bounced well off their lows of the session, with the Dow and the S&P 500 reaching positive territory.

The Dow climbed 145.99 points or 0.5 percent to 31,656.42 after falling by nearly 300 points, while the S&P 500 rose 11.85 points or 0.3 percent to 3,966.85. The tech-heavy Nasdaq also rebounded well off its worst level of the day but still closed down 31.08 points or 0.3 percent to 11,785.13.

Bargain hunting contributed to the rebound on Wall Street, with traders picking up stocks at reduced levels after the major averages once again fell to their lowest levels in over a month.

The early weakness on Wall Street reflected lingering concerns about higher interest rates and the impact on the global economy, which have weighed on the markets for the past several sessions.

A steep drop by shares of Nvidia (NVDA) also contributed to the early sell-off, with the graphics chipmaker plunging by 7.8 percent on the day.

The decline by Nvidia came after the company warned approximately $400 million in potential sales to China could be impacted by new U.S. licensing requirements on shipments of some of its most advanced chips.

Fellow chipmaker Advanced Micro Devices (AMD) also moved notably lower after saying some of its chips would also be impacted by the new requirements.

The extended sell-off on Wall Street also came as the latest labor and manufacturing data was seen as confirming the Federal Reserve’s stance that it can remain aggressive with the tightening of policy.

With the more closely watched monthly jobs report looming, the Labor Department released a report this morning unexpectedly showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended August 27th.

The report showed initial jobless claims edged down to 232,000, a decrease of 5,000 from the previous week’s revised level of 237,000.

The dip came as a surprise to economists, who had expected jobless claims to inch up to 248,000 from the 243,000 originally reported for the previous week.

A separate report released by the Institute for Supply Management showed its reading on U.S. manufacturing activity remained at a two-year low in August.

The ISM said its manufacturing PMI came in at 52.8 in August, unchanged from July. Economists had expected the index to edge down to 52.0.

While the index remained at its lowest level since hitting 52.4 in June 2020, a reading above 50 still indicates growth in the manufacturing sector.

Biotechnology stocks showed a substantial move to the upside over the course of the session, driving the NYSE Arca Biotechnology Index up by 2.3 percent. The index rebounded after hitting a two-month intraday low in early trading.

Considerable strength also emerged among healthcare and pharmaceutical stocks, with the Dow Jones U.S. Health Care Index and the NYSE Arca Pharmaceutical Index both climbing by 1.5 percent.

Utilities and retail stocks also moved notably higher as the day progressed, contributing to the recovery by the broader markets.

On the other hand, significant weakness remained visible among energy stocks, which saw further downside along with the price of crude oil. Crude for October delivery plunged $2.94 to $86.61 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 3.6 percent and the NYSE Arca Oil Index tumbled by 2.6 percent.

Gold stocks also remained sharply lower amid a continued decrease by the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 3.3 percent to its lowest closing level in well over two years.

Steel, semiconductor and computer hardware stocks also ended the day notably lower, although well off their worst levels of the day.

Commodity, Currency Markets

Crude oil futures are surging $2.34 to $88.95 a barrel after plunging $2.94 to $86.61 a barrel on Thursday. Meanwhile, after sliding $16.90 to $1,709.30 an ounce in the previous session, gold futures are climbing $7.20 to $1,716.50 an ounce.

On the currency front, the U.S. dollar is trading at 140.67 yen versus the 140.21 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0004 compared to yesterday’s $0.9946.

Asia

Asian stocks ended mixed on Friday as investors awaited a key U.S. jobs report due later in the day that could influence Federal Reserve plans for more interest rate hikes to curb record-high inflation.

The dollar held at a two-decade high, and gold dipped below $1,700 per ounce, while oil prices climbed in Asian trade, paring a hefty weekly decline ahead of next week’s OPEC+ meeting.

China’s Shanghai Composite index fluctuated before finishing marginally higher at 3,186.48. Hong Kong’s Hang Seng index dropped 0.74 percent to 19,452.09 amid new lockdowns in China triggered by COVID-19 scares.

Chengdu, the sixth-largest city in the People’s Republic, with a population of 21 million entered full lockdown yesterday following new virus outbreaks.

Japanese stocks closed lower, with a weakening yen helping limit the downside to some extent. The Nikkei average ended marginally lower at 27,650.84 and posted a 3.4 percent weekly decline. The broader Topix index slipped 0.27 percent to 1,930.17.

Gaming company Nexon tumbled 3.1 percent after reporting quarterly earnings. Department store operators J.Front Retailing and Isetan Mitsukoshi both gained around 2 percent.

Seoul stocks fell for a second day running as the latest price data showed inflation in the country would stay elevated for a while. The Kospi average ended 0.26 percent lower at 2,409.41 after a choppy trading.

Samsung Electronics fell 1.5 percent and SK Hynix shed 0.8 percent after data showed chip shipments dropped 7.8 percent year-on-year in August – marking the first on-year drop in 26 months. Chemical firm LG Chem and steelmaker POSCO lost 2-3 percent.

Australian markets finished modestly lower ahead of RBA’ s interest-rate decision due next week. Lower iron ore and metal prices weighed on the mining sector, with BHP, Rio Tinto and Fortescue Metals Group all falling more than 2 percent.

The benchmark S&P/ASX 200 index ended 0.25 percent lower at 6,828.70 and fell 3.9 percent for the week. The broader All Ordinaries index closed 0.33 percent lower at 7,056.30.

Europe

European stocks rebounded on Friday despite mounting concerns over Europe’s energy crisis and slowing growth momentum in the global economy.

Traders remained focused on a key U.S. monthly jobs report due later in the day that will give more information about the state of the world’s largest economy.

Meanwhile, market participants shrugged off data showing that German exports dropped for the first time in four months in July.

The pan European Stoxx 600 rose 0.7 percent to snap a five-session losing streak but was set for a weekly loss of nearly 4 percent.

The German DAX rallied 1.3 percent, while France’s CAC 40 index and the U.K.’s FTSE 100 both were up around 0.6 percent.

Banks and automakers were seeing broad-based gains.

Credit Suisse shares gained 2.3 percent after reports that the embattled Swiss bank is looking at cutting around 5,000 jobs as part of a cost-reduction drive.

Oil & gas firm BP Plc jumped nearly 3 percent and Shell added 2 percent in London, as oil prices rose nearly 3 percent ahead of next week’s OPEC+ meeting to discuss output cuts.

The United States said Thursday that a new response received from Iran on reviving a landmark nuclear deal of 2015 was unconstructive, putting a new hurdle on finalizing the agreement.

Ashmore Group surged 4.4 percent. After posting a decline in earnings for the fiscal 2022, the investment manager said it hopes the next 12 months offers potential for better conditions.

French industrial gases company Air Liquide Group fell about 1 percent. The company confirmed its intention to withdraw from Russia.

German food and beverages company GEA Group AG gained 1 percent. The company said it is investing 70 million euros to construct a new pharmaceutical technology center for freeze dryers in Germany.

Airline Lufthansa climbed 2.4 percent despite a pilots’ strike.

U.S. Economic Reports

Employment in the U.S. increased roughly in line with economist estimates in the month of August, according to a closely watched report released by the Labor Department on Friday.

The report showed non-farm payroll employment rose by 315,000 jobs in August after surging by a revised 526,000 jobs in July.

Economists had expected employment to increase by about 300,000 jobs compared to the jump of 528,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate edged up to 3.7 percent in August from 3.5 percent in July. Economists had expected the unemployment rate to remain unchanged.

At 10 am ET, the Commerce Department is scheduled to release its report on new orders for manufactured goods in the month of July. Factory orders are expected to edge up by 0.2 percent in July after jumping 2.0 percent in June.