Upbeat Jobs Data May Contribute To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to move to the upside after showing a lack of direction over the two previous sessions.

The futures climbed more firmly into positive territory following the release of a closely watched Labor Department repot showing much stronger than expected job growth in the month of September.

The Labor Department said non-farm payroll employment jumped by 254,000 jobs in September after climbing by an upwardly revised 159,000 jobs in August.

Economists had expected employment to rise by 140,000 jobs compared to the addition of 142,000 jobs originally reported for the previous month.

The report also showed the unemployment rate edged down to 4.1 percent in September from 4.2 percent in August. Economists had expected the unemployment rate to remain unchanged.

The stronger than expected jobs growth is likely to help ease concerns about the economic outlook, although it may also ease optimism the Federal Reserve will continue to aggressively lower interest rates in the coming months.

Following the jobs data, CME Group’s FedWatch Tool is indicating a 91.2 chance the Fed will lower rates by a quarter point in November and just a 8.8 percent chance of another half point rate cut.

Following the lackluster performance seen during trading on Wednesday, stocks continued to experience choppy trading during Thursday’s session. The major averages once again spent the day bouncing back and forth across the unchanged line.

The major averages eventually finished the day modestly lower. While the Nasdaq edged down 6.65 points or less than a tenth of a percent to 17,918.48, the S&P 500 slipped 9.60 points or 0.2 percent to 5,699.94 and the narrower Dow fell 184.93 points or 0.4 percent to 42,011.59.

The lack of direction on Wall Street came as traders seemed reluctant to make significant moves ahead of the release of the Labor Department’s highly anticipated monthly jobs report.

A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report this morning showing an uptick by first-time claims for U.S. unemployment benefits in the week ended September 28th.

Traders also kept an eye on the latest developments in the Middle East, where an escalating conflict has contributed to a sharp increase by the price of crude oil.

The Israel Defense Forces said around 100 projectiles were launched from Lebanon into Israel earlier today, while the IDF also said they have killed several Hezbollah commanders in a strike on a military structure in southern Lebanon.

The latest developments come following Iran’s ballistic missile attack on Israel earlier this week, with Israel vowing a “very strong” response.

Gold stocks saw substantial weakness on the day, dragging the NYSE Arca Gold Bugs Index down by 2.0 percent. The weakness in the sector came despite a modest increase by the price of gold.

Significant weakness was also visible among airline stocks, as reflected by the 1.4 percent loss posted by the NYSE Arca Airline Index.

Steel, networking and biotechnology stocks also showed notable moves to the downside, while energy stocks moved sharply higher along with the price of crude oil.

Commodity, Currency Markets

Crude oil futures are climbing $0.50 to $74.21 a barrel after soaring $3.61 to $73.71 a barrel on Thursday. Meanwhile, after rising $9.50 to $2,679.20 an ounce in the previous session, gold futures are falling $16.40 to $2,662.80 an ounce.

On the currency front, the U.S. dollar is trading at 148.43 yen versus the 146.93 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0965 compared to yesterday’s $1.1013.

Asia

Asian stocks ended mixed on Friday as Middle East tensions persisted and investors looked ahead to the all-important U.S. jobs report later in the day that could decide the path of U.S. interest rates.

The dollar hovered near a six-week high in Asian trading and gold traded near record levels, while oil prices steadied after having surged 5 percent the previous day as U.S. President Joe Biden said the U.S. was discussing possible strikes by Israel on Iran’s oil industry.

Trading was closed in Shanghai for a week-long holiday. Hong Kong’s Hang Seng Index jumped 2.8 percent to 22,736.87, with sentiment buoyed by Chinese stimulus measures announced recently.

Japanese markets edged up slightly as Prime Minister Shigeru Ishiba, during a speech today, discussed his economic and fiscal policies.

The Nikkei 225 Index inched up 0.2 percent to 38,635.62 as higher oil prices boosted energy-related shares. The broader Topix Index settled 0.4 percent higher at 2,694.07.

Seven & I Holdings rallied 3.1 percent on reports that the retail giant has approached potential buyers for its Ito-Yokado stores and supermarkets.

Seoul stocks ended a tad higher to snap a three-session losing streak. The Kospi rose 0.3 percent to 2,569.71. Automaker Hyundai Motor gained more than 1 percent, while tech heavyweight Samsung Electronics fell 1.1 percent.

Korea Zinc soared 8.8 percent after the company announced a share buyback plan amid the firm’s ongoing management feud.

Australian markets ended notably lower, though energy stocks and gold miners surged in response to the worsening situation in the Middle East.

The benchmark S&P/ASX 200 Index fell 0.7 percent to 8,150, while the broader All Ordinaries Index closed 0.7 percent lower at 8,416.60.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index gained 0.4 percent to end at 12,619.94.

Europe

European stocks are turning in a mixed performance on Friday amid concerns about a wider Middle East conflict.

While the U.K.’s FTSE 100 Index is down by 0.3 percent, the German DAX Index is up by 0.5 percent and the French CAC 40 Index is up by 0.8 percent.

Shipping firms such as Moeller-Maersk and Hapag Lloyd plunged 7 percent and 13 percent respectively, due to a worsening situation in the Middle East.

Hexagon Purus ASA shares were down nearly 16 percent. The Norwegian green automotive products provider said it has mutually agreed to terminate the 2024-27 deal with Daimler Truck Holding AG’ s (DTRUY) Daimler Truck North America to supply battery electric vocational vehicles.

Denmark’s DSV surged 6.7 percent after the logistics giant raised $5.5 billion in a share issue to partially finance its acquisition of Schenker.

Italian energy major Eni S.p.A. rose 1.3 percent after it secured the U.K. Government’s commitment and funding for the granting of an Economic License for the Liverpool Bay CO2 transport and storage or T&S project.

Alstom SA jumped 5.2 percent. The French rolling stock manufacturer has reaffirmed its annual EBIT margin guidance of around 6.5 percent, an improvement of around 80bps from prior year, helped by volume and mix, and initiates to reduce costs.

Sanofi rose 1.3 percent after Italian pharma group Recordati S.p.A., agreed with the French company to acquire the global rights to Enjaymo, the only approved treatment for people with cold agglutinin disease.

Energy giant BP Plc rose about 1 percent and peer Shell edged up slightly as oil prices remained on track for strong weekly gains due to a worsening Middle East conflict.

Watches of Switzerland Group rose more than 2 percent after it bought a New York-based watch enthusiast platform.

Pub behemoth J D Wetherspoon was marginally lower after unveiling its 2024 financial results.

U.S. Economic Reports

A closely watched report released by the Labor Department on Friday showed employment in the U.S. increased by much more than expected in the month of September.

The Labor Department said non-farm payroll employment jumped by 254,000 jobs in September after climbing by an upwardly revised 159,000 jobs in August.

Economists had expected employment to rise by 140,000 jobs compared to the addition of 142,000 jobs originally reported for the previous month.

The report also showed the unemployment rate edged down to 4.1 percent in September from 4.2 percent in August. Economists had expected the unemployment rate to remain unchanged.

At 9 am ET, New York Federal Reserve President John Williams is scheduled to give opening remarks before “The Future of New York City: Focus on Jobs” conference.