Friday May 4th

4-05-2018

US stocks set for negative open after jobs report misses expectations

U.S. stock index futures pointed to a lower open on Friday after the monthly jobs report missed expectations. Around 9:08 a.m. ET, Dow futures indicated an opening drop of 32 points. The Nasdaq and the S&P 500 futures also indicated lower starts for each index. The Labor Department reported that the economy added 164,000 jobs in the month of April, lower than the 195,000 expected by economists polled by Reuters. Average hourly earnings growth also missed, rising only 0.15 percent against expectations of a 0.2 percent gain. Despite the miss in the number of jobs added, the government said the unemployment rate fell to 3.9 percent, an 18-year low. "I was surprised we had a bit of a sell-off there," said JJ Kinahan, chief market strategist at TD Ameritrade. "You're a little bit light on the top line, and a little bit disappointing on the wage growth, but there was very little job loss and a revision higher from what was considered a very disappointing read last month." Changes in the average hourly earnings numbers are closely watched by members of the Federal Reserve as a bellwether for inflation. Earnings have been increasing at about a 2.7 percent pace, which is above the recovery pace but still short of where Federal Reserve officials are targeting. Still, the average hourly earnings miss wasn't large enough to derail fears of more aggressive tightening from the Fed, TD Ameritrade's Kinahan added. Those who fear rising rates "can find something in here to say it's good enough to keep down the path to four hikes this year," he said. "The other thing is, after we had that big down move yesterday and then came back, there's a bit of a natural pressure early in the day." The moves in pre-market trading came as markets across the globe showed a mixed picture. On Thursday, U.S. stocks finished relatively mixed, after the Dow Jones industrial average erased a nearly 400-point loss during the session, on the back of strong earnings. On Friday, markets in the Asia-Pacific region closed mostly lower, while in Europe, stocks edged higher during the session. Members of the United States' delegation will continue trade negotiations in China. Treasury Secretary Steve Mnuchin said Friday that the U.S. trade delegation had had positive talks with China so far, Reuters reported. A breakthrough deal between the nations on altering China's economic policies, however, is unlikely. Asia markets turned in a subdued performance, with major indexes closing in negative territory, as investors watched how U.S.-China trade talks progressed on Friday. Greater China markets were weak for most of the trading day, weighed down by losses in the financial and metals sectors. The Shanghai Composite edged down 0.32 percent to 3,091.03, while the Shenzhen Composite lost 0.21 percent to close at 1,789.07. The Hang Seng Index declined 1.06 percent at 3:13 p.m. HK/SIN, with financials and tech weighing down the index. The Kospi dropped 1.04 percent to close at 2,461.38. Japanese markets were closed on Friday for a holiday. Oil prices strengthened on Friday but stayed below recent highs as global supplies remained tight and the market awaited news from Washington on possible new U.S. sanctions against Iran. U.S. West Texas Intermediate (WTI) crude futures were up 18 cents to $68.61 per barrel by 7:57 a.m. ET (1157 GMT). Brent crude oil futures were at $73.75 per barrel, up 13 cents from their last close. The benchmark contract hit a 3-½ year closing high of $75.17 on Monday. Gold prices were steady on Friday as the U.S. jobs data reported that the unemployment rate fell to an 18-year low 3.9 percent. Non-farm payrolls increased by 164,000 in April against a 192,000 jobs expected, according to a report Friday from the Bureau of Labor Statistics. Spot gold was flat at $1,311.40 an ounce at 9:10 a.m. ET, while U.S. gold futures for June delivery was flat at $1,312.10.