Friday August 6th

6-08-2021

Dow futures jump after better-than-expected jobs report

U.S. stock index futures rose on Friday morning after the July jobs report came in better than economists projected. Dow futures were higher by 82 points, or 0.2%. S&P 500 futures were up slightly, while futures tied to the Nasdaq 100 dipped 0.3%. Friday’s jobs report showed that the U.S. economy added 943,000 jobs in July, according to the Labor Department. Economists expect the economy to have added 845,000 jobs last month, according to estimates from Dow Jones. The unemployment rate dropped to 5.4%. Bank shares led the gains post-jobs report as rates shot higher, increasing their profitability prospects. JPMorgan, Bank of America and Wells Fargo all gained more than 1% in premarket trading. Industrials, retailers and energy stocks also gained as the jobs report soothed concerns about the economic comeback. On the flip side, tech shares declined as the jump in rates caused investors to take profits in the names and move back into stocks that could benefit more from faster economic growth. Higher rates can also expose tech stock lofty valuations. Friday’s report comes after the weekly initial claims number reported on Thursday came in at 385,000, which was in-line with expectations. However, the ADP private payrolls report on Wednesday showed a smaller-than-expected number of jobs added during July. Wall Street is closely watching Friday’s jobs report given its potential to impact the Federal Reserve’s policy going forward. “This is a strong report. It is really going to cement the view that the Fed is not far off giving advance notice of a tapering announcement,” James McCann, the deputy chief economist for Aberdeen Standard Investments, said in a note. “Powell may well use the meeting of central bank policymakers in Jackson Hole later this month to provide further hints, but he has made clear that these jobs reports are a cornerstone in the Fed’s thinking on tightening policy.” The jobs report also created movement in the bond market. 10-year U.S. Treasury yield continued its recent streak of volatile trading, jumping to 1.27% after the report. The benchmark yield traded at 1.13% earlier this week. Yields move inverse to prices. Stocks finished Thursday’s session in the green, with the S&P 500 rising 0.6% to close at a new record. The Dow gained 271.58 points, or 0.78%. The Nasdaq Composite also advanced 0.78% for its fourth straight positive session. A busy week of earnings continues on Friday with several notable reports, including from Canopy Growth, AMC Networks, Draftkings, Norwegian Cruise Line and Goodyear Tire. Additionally, Berkshire Hathaway is on deck for Saturday morning. Through Thursday afternoon 427 S&P 500 components have posted quarterly results, with 88% topping earnings estimates, according to data from Refinitiv. When it comes to revenue, 87% have exceeded expectations. For the week, the Dow is up 0.4%. The S&P and Nasdaq are up 0.77% and 1.5%, respectively. Shares in Asia-Pacific were mixed on Friday as investors awaited the release of a closely watched U.S. jobs report. Shares of South Korea’s Kakao Bank surged in their Friday debut, rising nearly 80% from the issue price. South Korea’s broader Kospi slipped 0.18% to close at 3,270.36. Mainland Chinese stocks fell on the day, with the Shanghai composite down 0.24% to 3,458.23 while the Shenzhen component dipped 0.301% to 14,827.41. Hong Kong’s Hang Seng index was around 0.1% higher, as of its final hour of trading. In Japan, the Nikkei 225 gained 0.33% to close at 27,820.04 while the Topix index ended the trading day little changed at 1,929.34. U.S. crude oil futures were on track for their biggest weekly decline since late October on Friday, with prices coming under pressure as top consumers impose travel restrictions amid the spread of the delta variant of the coronavirus. Oil prices rose on Friday but remained on track for their biggest weekly decline since March on concerns over the impact on fuel demand from travel restrictions to curb the spread of the Delta variant of COVID-19. Brent crude oil futures were up 90 cents, or 1.3%, at $72.19 per barrel and U.S. West Texas Intermediate (WTI) crude futures rose 76 cents, or 1.1%, to $69.85 per barrel, though both contracts have given up more than 5% this week. Gold was pinned below the $1,800 mark on Friday as the dollar firmed in the run-up to a key U.S. employment report that could prove pivotal to the Federal Reserve’s monetary policy strategy. Spot gold fell 0.3% to $1,799.20 per ounce by 0844 GMT and was on course for its worst week since mid-June. U.S. gold futures eased 0.4% to $1,801.10.