Friday February 5th

5-02-2021

Futures rise despite disappointing jobs report, S&P 500 heads for best week since November

U.S. stock index futures rose early Friday following a four-day winning streak on Wall Street as investors digested the closely watched January jobs report. Futures on the Dow Jones Industrial Average pointed to an opening gain of more than 150 points. S&P 500 futures and Nasdaq 100 futures also both traded higher in the premarket. The Labor Department said the U.S. added 49,000 jobs in January, slightly below the 50,000 payrolls expected by economists. The unemployment rate fell to 6.3%, better than projections of 6.7%. December’s numbers were revised much lower, with the month posting a loss of 227,000 from the initial reading of 140,000 jobs lost. “The jobs number was particularly underwhelming as far fewer jobs were expected,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. “Ultimately, the stock market is anticipating continuing healing in the economy and has been moving higher because of Federal stimulus, which arguably is the bigger story.” There have been signs of improvement in the labor market recovery. Thursday’s weekly jobless claims data showed 779,000 first time filers, the lowest since Nov. 28 and below the 830,000 expected by economists. The S&P 500 rose for a fourth day to close at a record high on Thursday, boosted by tech and bank stocks. The Dow jumped more than 300 points in the previous session, while the Nasdaq Composite also reached a fresh high. “The rally’s three pillars actually got stronger: Q4 earnings continue to dramatically exceed expectations, more stimulus is being poured into the economy, and the vaccination pace is accelerating,” Adam Crisafulli, founder of VItal Knowledge, said in a note. With four straight days of gains, the major averages are on pace their best weekly performance since November. The blue-chip Dow has gained 3.6%, while the S&P 500 and the Nasdaq have risen 4.2% and 5.4%, respectively. The market rebounded from last week’s sharp losses as the speculative trading frenzy dissipated. Wall Street is in the middle of a solid earnings season. Of the 184 companies in the S&P 500 that have reported earnings to date, 84.2% topped analyst expectations, according to Refinitiv. Shares in Asia-Pacific rose on Friday following overnight gains stateside that saw the S&P 500 hitting a record closing high. The benchmark Hang Seng index in Hong Kong gained 0.6% to close at 29,288.68. Mainland Chinese stocks lagged as they closed lower: The Shanghai composite was down 0.16% to 3,496.33 while the Shenzhen component declined 0.653% to about 15,007.30. In Japan, the Nikkei 225 gained 1.54% to close at 28,779.19 while the Topix index rose 1.38% to finish its trading day at 1,890.95. South Korea’s Kospi advanced 1.07% to close at 3,120.63. Oil hit its highest level in a year on Friday, closing in on $60 a barrel on economic revival hopes and supply curbs by producer group OPEC and its allies. New orders for U.S.-made goods rose more than expected in December, pointing to continued strength in manufacturing. The U.S. Congress is also moving ahead on President Joe Biden’s COVID-19 relief plan. Brent crude was up 64 cents, or 1.1%, at $59.48 after hitting its highest since Feb. 20 last year at $59.75. U.S. crude was up 48 cents, or 0.9%, at $56.72, after reaching $57.09, its highest since Jan. 22 last year. Gold rose on Friday, but was set for its worst weekly dip in four as investors continued to bank on the dollar with U.S. Treasury yields also gaining. Spot gold rose 0.8% to $1,807.10 per ounce by 1059 GMT, after falling to its lowest since Dec. 1 on Thursday. U.S. gold futures gained 0.9% to $1,807.80. Gold’s initial dip below the $1,800 level infused some buying interest, evidenced by inflows into exchange traded funds (ETF), Commerzbank analyst Carsten Fritsch said in a note. The SPDR Gold Trust, the largest gold-back ETF, saw its highest inflows since Jan. 15, on Feb. 4. But for the week, gold has shed 2.2% so far, which would be its biggest decline since the week ended Jan. 8.