U.S. Stocks May See Further Upside As Jobs Report Looms

The major U.S. index futures are currently pointing to a modestly higher open on Thursday, with stocks likely to see further upside after recovering from an initial pullback to end the previous session mostly higher.

Stocks may benefit from recent upward momentum, which has seen the markets close higher for two straight days despite concerns about tariffs and some disappointing earnings news.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of the Labor Department’s closely watched monthly jobs report on Friday.

The report, which is expected to show employment climbed by 170,000 jobs in January after jumping by 256,000 jobs in December, could impact the outlook for interest rates.

A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits rose by more than expected in the week ended February 1st.

The report said initial jobless claims climbed to 219,000, an increase of 11,000 from the previous week’s revised level of 208,000.

Economists had expected initial jobless claims to rise to 213,000 from the 207,000 originally reported for the previous week.

Stocks came under pressure early in the session on Wednesday but showed a significant rebound over the course of the trading day. The major averages climbed well off their worst levels of the day and into positive territory.

The major averages reached new highs for the session going into the close of trading. The Dow advanced 317.24 points or 0.7 percent to 44,873.28, the S&P 500 climbed 23.60 points or 0.4 percent to 6,061.48 and the Nasdaq rose 38.31 points or 0.2 percent to 19,692.33.

The rebound on Wall Street came amid a notable move to the downside by treasury yields, with the yield on the benchmark ten-year note slumping to its lowest closing level in well over a month.

Treasury yields tumbled after the Treasury Department said its current auction sizes leave it well positioned to address potential changes to the fiscal outlook.

Based on current projected borrowing needs, the Treasury said it anticipates maintaining long-term securities auction sizes for at least the next several quarters.

The initial pullback on Wall Street came amid weakness among tech stocks due to a negative reaction to earnings news from Alphabet (GOOGL) and Advanced Micro Devices (AMD).

Shares of Alphabet plunged by 7.3 percent after the Google parent reported better than expected fourth quarter earnings but its cloud revenues missed estimates.

Chip maker AMD also tumbled by 6.3 percent after reporting fourth quarter earnings and revenues that beat estimates but its data center sales fell short of expectations.

On the U.S. economic front, the Institute for Supply Management released a report showing service sector growth in the U.S. unexpectedly slowed modestly in the month of January.

The ISM said its services PMI dipped to 52.8 in January from a revised 54.0 in December. While a reading above 50 still indicates growth, economists had expected the index to inch up to 54.3 from the 54.1 originally reported for the previous month.

Meanwhile, payroll processor ADP released a separate report showing private sector employment in the U.S. increased by more than expected in the month of January.

ADP said private sector employment climbed by 183,000 jobs in January after rising by an upwardly revised 176,000 jobs in December.

Economists had expected private sector employment to rise by 150,000 jobs compared to the addition of 122,000 jobs originally reported for the previous month.

Gold stocks moved sharply higher on the day, driving the NYSE Arca Gold Bugs Index up by 2.7 percent to a three-month closing high.

The rally by gold stocks came as the price of the precious metal continues to climb to record highs amid concerns about the escalating U.S.-China trade war.

Computer hardware stocks also saw considerable strength on the day, resulting in a 2.5 percent jump by the NYSE Arca Computer Hardware Index.

Semiconductor, telecom and biotechnology stocks also showed strong moves to the upside, while airline saw significant weakness.

Commodity, Currency Markets

Crude oil futures are rising $0.39 to $71.42 a barrel after tumbling $1.67 to $71.03 a barrel on Wednesday. Meanwhile, after climbing $17.20 to $2,893 an ounce in the previous session, gold futures are slipping $9.40 to $2,883.60 an ounce.

On the currency front, the U.S. dollar is trading at 152.25 yen versus the 152.61 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0361 compared to yesterday’s $1.0403.

Asia

Asian stocks rose broadly on Thursday as trade war fears eased and Treasury yields dipped on easing inflation concerns.

A softer dollar underpinned base metal prices and gold steadied near record high levels, while oil prices recovered some ground after falling nearly 2 percent in the previous session.

China’s Shanghai Composite Index rallied 1.3 percent to 3,270.66 on eased concerns over a potential global trade war.

The U.S. Postal Service (USPS) has resumed accepting parcels from mainland China and Hong Kong, reversing a brief suspension triggered by new trade measures introduced by U.S. President Donald Trump.

Hong Kong’s Hang Seng Index jumped 1.4 percent to 20,891.62 after forecasts of high capital spending on artificial intelligence from Wall Street’s biggest firms.

Japanese markets extended gains for a third consecutive session, led by heavyweights and technology stocks.

The Nikkei 225 Index climbed 0.6 percent to 39,066.53 amid volatility and currency pressures on speculation over BoJ rate hikes. The broader Topix Index settled 0.3 percent higher at 2,752.20.

Fast Retailing, the operator of Uniqlo, advanced 1.8 percent. Nissan Motor soared 7.3 percent after reportedly notifying Honda of its intent to end merger talks. Honda Motor shares tumbled 4 percent.

In the tech sector, Advantest and SoftBank both rose about 1 percent while Tokyo Electron surged 2 percent and Screen Holdings jumped 4.1 percent.

Seoul stocks gained for a third straight session, with top-cap tech shares leading the surge. Semiconductor leaders Samsung Electronics and SK Hynix climbed 2.1 percent and 2.4 percent respectively, while the Kospi finished 1.1 percent higher at 2,536.75.

Australian markets ended sharply higher, adding to gains from the last two sessions. The benchmark S&P/ASX 200 Index surged 1.2 percent to 8,520.70, ending just off a record high on optimism for a rate cut in February.

The broader All Ordinaries Index closed up 1.2 percent at 8,785.10, driven by strength in financial stocks. Banks National Australia Bank, Commonwealth Bank of Australia and Westpac all ended up over 2 percent.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index fell 0.5 percent to 12,844.59.

Europe

European shares have advanced to near record levels on Thursday, as trade war fears ease and data showed Germany’s factory orders rebounded at a much stronger than expected pace in December, largely driven by the manufacture of transport equipment.

New orders increased 6.9 percent month-on-month in December, reversing a revised 5.2 percent slump in November, Destatis reported earlier today. Orders were forecast to grow only 1.9 percent.

Meanwhile, the Bank of England reduced its interest rate by a quarter-point, citing progress on disinflation path.

The Monetary Policy Committee voted 7-2 to reduce the benchmark bank rate to 4.50 percent from 4.75 percent. The decision came in line with expectations.

The U.K.’s FTSE 100 Index is up by 1.6 percent, the French CAC 40 Index is up by 1.0 percent and the German DAX Index is up by 0.8 percent.

French liquor group Pernod Ricard has shown a significant move to the upside despite lowering its expectations for its fiscal year.

Societe Generale has also soared after the lender doubled its profits in the fourth quarter on higher revenues.

ArcelorMittal, the world’s second-largest steelmaker, has also jumped as its fourth quarter earnings surpassed expectations.

Siemens Healthineers has also surged as the medical technology company reported fiscal first quarter revenue above consensus and confirmed its full-year outlook.

Mining giant Anglo American has also move sharply higher after reporting a solid operational performance for the fourth quarter of 2024.

AstraZeneca shares have also spiked. The drug maker reported better-than-expected profit and sales in the fourth quarter amid strong sales of cancer, lung and immunology treatments.

Danish shipping firm Maersk has also skyrocketed after its fourth quarter profit topped forecasts.

On the other hand, Dutch bank ING Group has tumbled after saying it does not expect its annual total income to grow in 2025.

Volvo Car AB has also plunged. The company reported a decrease in fourth quarter operating profit and predicted a turbulent 2025 amid weak demand and trade tensions.

U.S. Economic News

A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report on Thursday showing first-time claims for U.S. unemployment benefits rose by more than expected in the week ended February 1st.

The report said initial jobless claims climbed to 219,000, an increase of 11,000 from the previous week’s revised level of 208,000.

Economists had expected initial jobless claims to rise to 213,000 from the 207,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also crept up to 216,750, an increase of 4,000 from the previous week’s revised average of 212,750.

A separate report released by the Labor Department on Thursday showed U.S. labor productivity and unit labor costs both increased by less than expected in the fourth quarter of 2024.

The Labor Department said labor productivity shot up by 1.2 percent in the fourth quarter after surging by an upwardly revised 2.3 percent in the third quarter. Economists had expected labor productivity to jump by 1.7 percent.

Meanwhile, the report said unit labor costs spiked by 3.0 percent in the third quarter after rising by a downwardly revised 0.5 percent in the third quarter. Economists had expected unit labor costs to soar by 3.8 percent.

At 2:30 pm ET, Federal Reserve Board Governor Christopher Waller is due to discuss “Payments” before a “Navigating the Future of Payments with Christopher Waller” event hosted by the Atlantic Council.

At 5 pm ET, Dallas Federal Reserve President Lorie Logan is scheduled to participate in a “Future Challenges for Monetary Policy in the Americas” panel before the Bank for International Settlements Chapultepec Conference.