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Stocks May Open Lower Following Monthly Jobs Report - U.S. Commentary

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After once again climbing to new record highs in the previous session, stocks may move back to the downside in early trading on Friday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 42 points.

The downward momentum on Wall Street comes following the release of a report from the Labor Department showing an unexpected drop in employment in the month of September.

The report said non-farm payroll employment fell by 33,000 jobs in September after climbing by an upwardly revised 169,000 jobs in August.

The modest decrease surprised economists, who had expected employment to rise by 90,000 jobs compared to the addition of 156,000 jobs originally reported for the previous month.

The Labor Department said a sharp decline in employment in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Harvey and Irma.

Despite the unexpected drop in employment, the unemployment rate dipped to 4.2 percent in September from 4.4 percent in August. Economists had expected the unemployment rate to hold at 4.4 percent.

The report also showed a notable acceleration in the pace of wage growth, as average hourly employee earnings were up by 2.9 percent year-over-year in September compared to 2.5 percent in August.

"Hurricane disruption dragged payrolls negative, but a big fall in unemployment and significant wage increases make a December rate hike look probable," said James Knightley, chief international economist at ING.

Shortly after the start of trading, the Commerce Department is scheduled to release its report on wholesale trade in the month of August. Wholesale inventories are expected to climb by 1 percent.

The Federal Reserve is also due to release its report on consumer credit in the month of August later in the day. Consumer credit is expected to increase by $16.0 billion.

After initially seeing modest strength, stocks saw further upside over the course of the trading session on Thursday. With the gains, the major averages extended a recent upward trend, once again reaching new record closing highs.

The major averages finished the session firmly in positive territory. The Dow rose 113.75 points or 0.5 percent to 22,775.39, the Nasdaq advanced 50.73 points or 0.8 percent to 6,585.36 and the S&P 500 climbed 14.33 points or 0.6 percent to 2,552.07.

In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Friday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both rose by 0.3 percent. Markets in mainland China remained closed.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the French CAC 40 Index is down by 0.2 percent, the U.K.'s FTSE 100 Index is up by 0.2 percent and the German DAX Index is up by 0.1 percent.

In commodities trading, crude oil futures are tumbling $1.07 to $49.72 a barrel after climbing $0.81 to $50.79 a barrel on Thursday. Meanwhile, after sliding $3.60 to $1.273.20 an ounce in the previous session, gold futures are falling $4 to $1,269.20 an ounce.

On the currency front, the U.S. dollar is trading at 113.39 yen compared to the 112.82 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1681 compared to yesterday's $1.1711.

by RTT Staff Writer

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