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Stocks May Open Sharply Higher Following Strong Jobs Data - U.S. Commentary


Stocks are likely to move back to the upside in early trading on Friday following the sharp drop seen in the previous session. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 311 points.

The futures remain firmly positive following the release of a report from the Labor Department showing much stronger than expected job growth in the month of December.

The Labor Department said non-farm payroll employment soared by 312,000 jobs in December after climbing by an upwardly revised 176,000 jobs in November.

Economists had expected employment to increase by about 177,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month.

Despite the much stronger than expected job growth, the report said the unemployment rate rose to 3.9 percent in December from 3.7 percent in November. The unemployment rate had been expected to come in unchanged.

The Labor Department also said average hourly employee earnings payrolls climbed by 11 cents to $27.48 in December, reflecting a 3.2 percent increase compared to the same month a year ago.

The data may offset recent concerns about the economic outlook but is also likely to reinforce fears about a continued interest rate hikes by the Federal Reserve.

The early advance by the futures came after China's Commerce Ministry said China and the U.S. would hold vice ministerial level trade talks in Beijing next week.

Slowing growth in China is having an impact on Apple and other American companies, but sales should recover once Washington strikes a trade deal with Beijing, a senior White House adviser said.

Shortly after the start of trading, traders are likely to keep an eye on remarks by Federal Reserve Chairman Jerome Powell

Powell is due to participate in a joint discussion with former Fed Chairs Janet Yellen and Ben Bernanke at the American Economic Association and Allied Social Science Association annual meeting in Atlanta, Georgia

After recovering from an initial move to the downside on Wednesday, stocks remained firmly negative following an early sell-off on Thursday. With the sharp pullback on the day, the major averages more than offset Wednesday's modest gains.

The major averages ended the session just off their worst levels of the day. The Dow tumbled 660.02 points or 2.8 percent to 22,686.22, the Nasdaq plunged 202.43 points or 3 percent to 6,463.50 and the S&P 500 slumped 62.14 points or 2.5 percent to 2,447.89.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index plummeted by 2.3 percent, while Hong Kong's Hang Seng Index surged up by 2.2 percent.

Meanwhile, the major European markets have all shown strong moves to the upside on the day. While the German DAX Index has jumped by 1.8 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are both up by 1.3 percent.

In commodities trading, crude oil futures are advancing $0.94 to $48.03 a barrel after rising $0.55 to $47.09 on Thursday. Meanwhile, after climbing $10.70 to $1,294.80 an ounce in the previous session, gold futures are falling $4.70 to $1,290.10 an ounce.

On the currency front, the U.S. dollar is trading at 108.36 yen compared to the 107.68 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1372 compared to yesterday's $1.1394.

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