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Futures Turn Positive Following Monthly Jobs Report

The major U.S. index futures are currently pointing to a modestly higher opening on Friday after indicating a lower open for the markets for much of the morning.

The futures turned positive after the Labor Department's monthly employment report showed much weaker than expected job growth in the month of November.

While the report paints a less favorable picture of the labor market, the data may ease recent concerns about the Federal Reserve raising interest rates too aggressively.

A report from the Wall Street Journal on Thursday said officials are considering signaling a "wait-and-see mentality" after a likely interest rate hike later this month.

The report contributed to a substantial turnaround on Wall Street, with stocks rebounding after falling sharply early in the session amid continued skepticism about a U.S.-China trade deal.

After falling sharply early in the session, stocks showed a substantial rebound over the course of the trading day on Thursday. The major averages bounced well off their worst levels of the day, with the tech-heavy Nasdaq climbing into positive territory.

The Dow fell by nearly 800 points to its lowest intraday level in over a month but ended the day down by just 79.40 points or 0.3 percent at 24,947.67. The S&P 500 edged down 4.11 points or 0.2 percent to 2,695.95, while the Nasdaq rose 29.83 points or 0.4 percent to 7,188.26.

The rebound on Wall Street was partly attributed to the Journal report, which said Fed officials still think interest will move broadly higher in 2019 but are becoming "less sure how fast they will need to act or how far they will need to go."

Traders also went bargain hunting following the early sell-off driven by skepticism about the potential for a long-term trade agreement between the U.S. and China after the arrest of a top executive at Chinese tech giant Huawei.

Huawei CFO Meng Wanzhou was arrested in Canada on suspicion of violating U.S. trade sanctions against Iran and faces possible extradition to the U.S.

The development added to uncertainty about whether the 90-day trade truce negotiated by President Donald Trump and Chinese President Xi Jinping will give the two sides enough time to reach a long-term deal.

Traders were also reacting to a slew of U.S. economic data, as several reports originally due to be released on Wednesday were postponed due to former President George H.W. Bush's funeral.

Payroll processor ADP released a report showing private sector employment increased by less than expected in the month of November.

ADP said private sector employment climbed by 179,000 jobs in November after jumping by a downwardly revised 225,000 jobs in October.

Economists had expected an increase of about 195,000 jobs compared to the addition of 227,000 jobs originally reported for the previous month.

"Job growth is strong, but has likely peaked," said Mark Zandi, chief economist of Moody's Analytics. "This month's report is free of significant weather effects and suggests slowing underlying job creation."

He added, "With very tight labor markets, and record unfilled positions, businesses will have an increasingly tough time adding to payrolls."

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits edged down by less than expected in the week ended December 1st.

The report said initial jobless claims slipped to 231,000, a decrease of 4,000 from the previous week's revised level of 235,000. Economists had expected jobless claims to dip to 225,000.

The Commerce Department also released a report showing the U.S. trade deficit widened to its highest level in ten years in the month of October.

The report said the trade deficit widened to $55.5 billion in October from a revised $54.6 billion in September. Economists had expected the trade deficit to widen to $55.0 billion.

Meanwhile, a report from the Institute for Supply Management unexpectedly showed an acceleration in the pace of growth in service sector activity in the month of November.

The ISM said its non-manufacturing index crept up to 60.7 in November after pulling back to 60.3 in October, with a reading above 50 indicating service sector growth. Economists had expected the index to dip to 59.2.

"The non-manufacturing sector continued to reflect strong growth in November," said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee. "However, concerns persist about employment resources and the impact of tariffs."

Despite the rebound by the broader markets, energy stocks still ended the day significantly lower amid a steep drop by the price of crude oil.

Reflecting the weakness in the energy sector, the Philadelphia Semiconductor Index plunged by 4.4 percent, the NYSE Arca Natural Gas Index tumbled by 2.4 percent and the NYSE Arca Oil Index slumped by 1.7 percent.

Considerable weakness also remained visible among banking stocks, as reflected by the 1.6 percent drop by the KBW Bank Index. The index ended the session at its lowest closing level in over a month.

Steel and chemical stocks also climbed well off their worst levels of the session but still ended the day firmly in negative territory.

On the other hand, interest rate sensitive commercial real estate and housing stocks showed strong moves to the upside, driving the Dow Jones Real Estate Index and the Philadelphia Housing Sector Index up by 2.5 percent and 2.4 percent, respectively.

Significant strength also emerged among networking stocks, resulting in a 1.4 percent advance by the NYSE Arca Networking Index.

Commodity, Currency Markets

Crude oil futures are soaring $2.27 to $53.76 a barrel after tumbling $1.40 to $51.49 a barrel on Thursday. Meanwhile, after rising $1 to $1,243.60 an ounce in the previous session, gold futures are climbing $4.10 to $1,247.70 an ounce.

On the currency front, the U.S. dollar is trading at 112.80 yen compared to the 112.68 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1388 compared to yesterday's $1.1374.

Asia

Asian stocks ended a lackluster session mostly higher on Friday after U.S. stocks recovered from an early plunge to end mixed overnight, helped by hopes the Federal Reserve could pause its interest rate hikes.

Investors looked ahead to a key U.S jobs report, with economists expecting employment to increase by 205,000 jobs in November after an increase of 250,000 jobs in October. The jobless rate is expected to hold at 3.7 percent.

Chinese shares ended flat in thin trading after a sharp drop on Thursday. The benchmark Shanghai Composite Index finished marginally higher at 2,605.89 after losing 1.7 percent in the previous session, as the arrest of Huawei CFO Meng Wanzhou dealt a blow to hopes of easing of U.S.-China trade tensions. Hong Kong's Hang Seng Index eased 0.4 percent to close at 26,063.76.

Japanese shares snapped a three-day losing streak despite a firm yen on lingering trade worries. The Nikkei 225 Index gained 177.06 points or 0.8 percent to finish at 21,678.68, while the broader Topix Index closed 0.6 percent higher at 1,620.45.

Tokyo Electric Power, Suzuki Motor, Fast Retailing, Fujitsu, Dentsu and Nippon Express rallied 3-4 percent, while Mitsui Mining & Smelting, Showa Shell Sekiyu KK and Takeda Pharma lost 3- 5 percent.

Japan Petroleum lost 2.2 percent and Inpex Corp. dropped 1.1 percent as oil extended losses from the previous session after OPEC ended talks in Vienna without a deal on output cuts.

Transport services company Yamato Holdings jumped 3.5 percent after issuing a positive trading update. Kurabo Industries Ltd. also soared 6.7 percent on a Nikkei report that ZOZO Inc. will use threads made by Kurabo for their clothing brand.

On the data front, the average of household spending in Japan fell an annual 0.3 percent in October, a government report showed. That missed expectations for an increase of 1.1 percent following the 1.6 percent decline in September.

Australian stocks rose modestly to snap a three-day losing streak, as banks gained ground amid expectations the country's central bank may consider an interest rate cut next year due to softer economic data.

The benchmark S&P/ASX 200 Index rose 23.80 points or 0.4 percent to 5,681.50, while the broader All Ordinaries Index ended up 21.20 points or 0.4 percent at 5,757.90.

The big four banks, known for their stable dividends, rose between 0.2 percent and 1 percent. An overnight slide in base metal prices pulled down miners, with BHP and South32 ending down 0.7 percent and 1 percent, respectively.

IOOF Holdings tanked 35.8 percent after the prudential regulator moved to disqualify five senior employees of the wealth manager for failing to act in their customers' interests.

Origin Energy jumped 3.1 percent after criticizing the government's policies and holding its investor day.

In economic news, Australia's construction sector continued to contract in November, the latest survey from the Australian Industry Group showed with a Performance of Construction Index score of 44.5, down from 46.4 in the previous month.

Europe

European stocks bounced back on Friday after sharp losses the previous day following the arrest of the chief financial officer of Chinese tech giant Huawei.

Investors drew some comfort from a firm dollar and a late Wall Street recovery overnight, helped by hopes that the U.S. Federal Reserve could pause its interest rate hikes.

After Fed officials signaled a more flexible approach to policy in 2019, speculation is rife that the U.S. central bank is now prepared to pause the interest rate hike agenda after December.

Investors are also keeping an eye on oil price movements as OPEC ministers meet for a third day in Vienna to try to hammer out an agreement on output cuts.

While the German DAX Index has climbed by 0.6 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are jumping by 1.4 percent and 1.6 percent, respectively.

German enterprise software vendor SAP has rallied after it announced free access for SAP partners to the SAP Cloud Platform.

Fiat Chrysler Automobiles NV is slightly higher on a Wall Street Journal report that it plans to open a new vehicle factory in Detroit.

Nokia Oyj has shown a strong move to the upside on expectations that it could benefit from Huawei's challenges.

British real estate investment trust Land Securities Group has also jumped. The company has expanded its presence in Southwark with the acquisition of a 1.6 acre site in Lavington Street, SE1 for 87.1 million pounds.

Housebuilder Berkeley Group Holdings has also risen after reporting its first-half earnings.

On the other hand, healthcare firm Fresenius has plunged after saying its ambitious group targets for 2020 would not be met.

Associated British Foods has also tumbled. The food processing and retailing company has warned of challenging trading at Primark in the run-up to Christmas.

In economic news, German industrial production in October dropped 0.5 percent from September, when production grew 0.1 percent, official data showed. Economists had forecast a 0.3 percent increase.

The U.K. house price index rose 0.3 percent year-on-year in the three months to November after a 1.5 percent increase in the three months to October, figures from the Lloyds Banking Group subsidiary Halifax showed. Economists had expected 1 percent growth.

U.S. Economic Reports

After reporting strong job growth in the previous month, the Labor Department released a report showing employment in the U.S. increased by much less than expected in the month of November.

The report said non-farm payroll employment rose by 155,000 jobs in November after surging up by a downwardly revised 237,000 jobs in October.

Economists had expected employment to climb by about 200,000 jobs compared to the jump of 250,000 jobs originally reported for the previous month.

The Labor Department said the job growth in November reflected notable increases in employment in the health care, manufacturing, and transportation and warehousing sectors.

Meanwhile, the report said the unemployment rate in November remained unchanged for the second straight month at 3.7 percent, holding at its lowest level since hitting 3.5 percent in December of 1969.

Average hourly employee earnings rose by $0.06 to $27.35 in November, reflecting a 3.1 percent increase compared to the same month a year ago.

At 10 am ET, the University of Michigan is scheduled to release its preliminary report on consumer sentiment in the month of December. The consumer sentiment index is expected to edge down to 97.0 in December after dipping to 97.5 in November.

The Commerce Department is also due to release its report on wholesale inventories in the month of October at 10 am ET. Wholesale inventories are expected to climb by 0.7 percent.

At 12:15 pm ET, Federal Reserve Board Governor Lael Brainard is scheduled to speak about current financial stability issues at a luncheon at the Peterson Institute for International Economics in Washington, D.C.

The Fed is due to release its report on consumer credit in the month of October at 3 pm ET. Consumer credit is expected to jump by $17.0 billion.

Stocks In Focus

Shares of Big Lots (BIG) are moving sharply lower in pre-market trading after the discount retailer reported a wider than expected fiscal third quarter loss and lowered its full-year earnings guidance.

Apparel retailer Zumiez (ZUMZ) may also come under pressure after reporting fiscal third quarter earnings that missed estimates and providing disappointing revenue guidance for the current quarter.

Shares of United Natural Foods (UNFI) are also likely to see initial weakness after the organic and specialty foods distributor reported weaker than expected fiscal first quarter adjusted earnings.

On the other hand, shares of Broadcom (AVGO) are moving significantly higher in pre-market trading after the chip maker reported better than expected fiscal fourth quarter results, forecast double digit revenue growth in fiscal 2019 and raised its quarterly dividend.

Firearm maker American Outdoor Brands (AOBC) also seeing substantial pre-market strength after reporting fiscal second quarter results that exceeded analyst estimates on both the top and bottom lines.

Shares of Yelp (YELP) may also move to the upside on news the online review site operator will replace Gulfport Energy (GPOR) in the S&P MidCap 400 effective prior to the start of trading next Wednesday.

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