logo
Plus   Neg
Share
Email

Mixed Jobs Data May Lead To Choppy Trading

The major U.S. index futures are currently pointing to a mixed opening on Friday after the major averages ended the previous session on opposite sides of the unchanged line.

Traders may be reluctant to make significant moves after the Labor Department's closely watched jobs report showed employment jumped by much more than expected in the month of January as well as a substantial downward revision to the pace of job growth in December.

The report also showed an unexpected uptick in the unemployment rate, reflecting a decrease in the household survey measure of employment.

A slew of U.S. economic data is also scheduled to be released after the start of trading, while traders are also likely to keep an eye on any developments regarding the U.S.-China trade talks.

Following the rally seen over the course of the previous session, stocks saw some further upside during trading on Thursday. While the Dow bucked the uptrend, the broader Nasdaq and the S&P 500 climbed firmly into positive territory.

The Nasdaq surged up 98.66 points or 1.4 percent to 7,281.74 and the S&P 500 advanced 23.05 points or 0.9 percent to 2,704.10, with both indexes reaching their best closing levels in nearly two months. On the other hand, the Dow edged down 15.19 points or 0.1 percent to 24,999.67.

A steep drop by shares of DowDuPont (DWDP) weighed on the Dow, with the chemical giant plunging by 9.2 percent after reporting fourth quarter earnings in line with estimates but on weaker than expected revenues.

Software giant Microsoft (MSFT) also ended the day lower after reporting fiscal second quarter revenues that missed estimates.

On the other hand, the tech-heavy Nasdaq benefited from a sharp jump by shares of Facebook (FB), with the social giant spiking by 10.8 percent after reporting fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

General Electric (GE) also posted a standout gain after the conglomerate reported fourth quarter earnings that missed analyst estimates but better than expected revenues.

GE also announced a $1.5 billion settlement with the Justice Department related to its now-defunct subprime mortgage business WMC, consistent with the prior reserve for the matter.

In economic news, the Labor Department released a report showing a significant rebound in initial jobless claims in the week ended January 26th.

The report said initial jobless claims surged up to 253,000, an increase of 53,000 from the previous week's revised level of 200,000. Economists had expected jobless claims to rise to 215,000.

With the much bigger than expected increase, jobless claims reached their highest level since hitting 254,000 in September of 2017.

The slightly upwardly revised reading on jobless claims in the previous week was still the lowest since a matching figure in October of 1973.

Meanwhile, a separate report from the Commerce Department showed new home sales rebounded by much more than anticipated in November.

The report released Thursday showed new home sales soared by 16.9 percent to an annual rate of 657,000 in November after plunging by 8.3 percent to a revised rate of 562,000 in October.

Economists had expected new home sales to rise to a rate of 560,000 from the 544,000 originally reported for the previous month.

Tobacco stocks showed a substantial move to the upside on the day, extending the rally seen over the course of the previous session.

Reflecting the strength in the sector, the NYSE Arca Tobacco Index surged up by 2.6 percent to its best closing level in nearly two months.

Considerable strength also emerged among interest rate-sensitive utilities stocks, as reflected by the 2.1 percent spike by the Dow Jones Utilities Average.

Gold stocks also saw significant strength, benefiting from a continued increase by the price of the precious The NYSE Arca Gold Bugs Index jumped by 2 percent.

Telecom, housing, and pharmaceutical stocks also moved notably higher on the day, while weakness was visible among chemical and energy stocks

Commodity, Currency Markets

Crude oil futures are inching up $0.04 to $53.83 a barrel after falling $0.44 to $53.79 a barrel on Thursday. Meanwhile, after jumping $9.70 to $1,325.20 an ounce in the previous session, gold futures are slipping $0.30 to $1,324.90 an ounce.

On the currency front, the U.S. dollar is trading at 108.96 yen compared to the 108.89 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1474 compared to yesterday's $1.1448.

Asia

Asian stocks ended on a muted note on Friday as weak manufacturing data from China as well as lingering trade tensions offset upbeat corporate earnings results from the U.S. Investors also awaited cues from the latest U.S. jobs report due later in the day.

The two-day U.S.-China trade talks ended without anything concrete results, although U.S. President Donald Trump said the trade dispute would hopefully be resolved before the March 1 deadline.

China's Shanghai Composite index rallied 33.66 points or 1.3 percent to close at 2,618.23 even as weak data reinforced investor concerns of a slowdown in the world's second-largest economy. Hong Kong's Hang Seng Index slipped 11.73 points to close at 27,930.74.

A private survey showed that Chinese factory activity continued to weaken last month, providing the latest evidence of a prolonged economic slowdown.

The Caixin/Markit PMI dropped to 48.3 in January from 49.7 in the previous month. Analysts had expected a score of 49.5.

Japanese shares finished marginally higher as investors digested mixed economic readings. While Japanese manufacturing activity grew at its slowest pace in 29 months in January, the jobless rate unexpectedly fell to 2.4 percent in December from 2.5 percent the month before.

The Nikkei 225 Index edged up 14.90 points or 0.1 percent to 20,788.39, while the broader Topix closed 0.2 percent lower at 1,564.63.

Exporters ended mixed, with Canon climbing 1 percent and Sony rising 0.6 percent but Panasonic sliding 0.9 percent. Banks Mitsubishi UFJ Financial and Sumitomo Mitsui Financial fell around 2 percent.

Australian markets finished marginally lower as continued gains in the mining sector were offset by losses among banks and energy stocks.

Investors ignored the latest survey from the Australian Industry Group showing that the country's manufacturing sector moved to expansion in January.

The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index ended at 5,862.80 and 5,935.30, respectively.

Mining heavyweights BHP and Rio Tinto rose around half a percent to extend recent strong gains as iron ore futures hovered at 17-month highs after a dam disaster in Brazil.

Gold miners Newcrest Mining and Northern Star gained around 1 percent as gold prices hovered near nine-month highs after the Fed's dovish message.

Private hospital operator Healthscope rallied 3.8 percent after it agreed to be acquired by Canadian investment company Brookfield Asset Management for A$4.5 billion.

On the other hand, Whitehaven Coal declined 1.6 percent after reports that some ports in northeastern China have stopped customs clearings on imported coking coal.

Banks ANZ, Commonwealth and NAB ended modestly lower ahead of the publication of the Kenneth Hayne royal commission recommendations on Monday.

New Zealand shares ended modestly higher, with the benchmark S&P/NZX 50 Index finishing up 13.83 points or 0.15 percent at 8,999.17.

Europe

European stocks are turning in another lackluster performance on Friday as investor watch developments on U.S.-China trade relations.

The two-day U.S.-China trade talks ended without concrete results, although China promised to "substantially" expand purchases of U.S. goods.

Meanwhile, U.S. President Donald Trump said the trade dispute would hopefully be resolved before the March 1 deadline.

While the U.K.'s FTSE 100 Index has risen by 0.3 percent, the French CAC 40 Index and the German DAX Index are both lingering near the unchanged line.

Outdoor advertising company JCDecaux has soared after its fourth quarter adjusted organic revenue grew 5.4 percent. Sweden's Electrolux has also moved sharply higher after its fourth quarter profit topped forecasts

Paddy Power Betfair has also moved to the upside in London after buying a 51 percent stake in Adjarabet for 101 million pounds.

Meanwhile, German lender Deutsche Bank has moved notably lower despite narrowing its fourth quarter loss.

TalkTalk Telecom Group has slumped after a warning that customer acquisition costs will dent profits by up to 15 million pounds this year.

In economic news, U.K. manufacturing growth slowed more than expected in January to its lowest level in three months, survey data from IHS Markit showed.

The IHS Markit/CIPS Purchasing Managers' Index for manufacturing fell to 52.8 from 54.2 in December. Economists had forecast a score of 53.5.

The Eurozone manufacturing PMI fell to 50.5 in January, in line with the flash estimate and down from December's 51.4.

U.S. Economic Reports

A closely watched report released by the Labor Department showed employment in the U.S. jumped by much more than expected in the month of January, although the report also showed a substantial downward revision to the pace of job growth in December.

The Labor Department said non-farm payroll employment surged up by 304,000 jobs in January compared to economist estimates for an increase of about 165,000 jobs.

However, the report also showed the spike in employment in the previous month was downwardly revised to 222,000 jobs from the initially reported 312,000 jobs.

The Labor Department also said the unemployment rate unexpectedly inched up to 4.0 percent in January from 3.9 percent in December. Economists had expected the unemployment rate to be unchanged.

Meanwhile, the report said average hourly employee earnings rose by 3 cents to $27.56 in January, reflecting a 3.2 percent increase compared to the same month a year ago.

Dallas Federal Reserve President Robert Kaplan is due to participate in a moderated Q&A session at the Texas Lyceum Public Conference in Austin, Texas, at 9:45 am ET.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of January.

The ISM's purchasing managers index is expected to edge down to 54.0 in January from 54.1 in December, although a reading above 50 would still indicate growth in the manufacturing sector.

The University of Michigan is also due to release its revised report on consumer sentiment in the month of January at 10 am ET. The consumer sentiment index is expected to be upwardly revised to 90.8 from 90.7.

Additionally, the Commerce Department will release delayed reports on construction spending and wholesale inventories in November at 10 am ET.

Construction spending is expected to tick up by 0.2 percent in November after slipping by 0.1 percent in October, while wholesale inventories are expected to rise by 0.5 percent after climbing by 0.8 percent.

Stocks In Focus

Shares of Amazon (AMZN) are moving notably lower in pre-market trading after the online retail giant reported fourth quarter results that exceeded analyst estimates but forecast weaker than expected first quarter revenues.

Cigna (CI) and CVS Health (CVS) are also seeing notable pre-market weakness after the Trump administration proposed ending backdoor rebates and encouraging direct discount to patients are part of an effort to lower drug costs.

On the other hand, shares of Yum China (YUMC) may move to the upside after the fast food restaurant company reported fourth quarter earnings that beat expectations.

For comments and feedback contact: editorial@rttnews.com

Market Analysis

Follow RTT