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U.S. Stocks Likely To Rally On Strong Labor Department Data

wallstreet aug30 05jun20 lt

Stocks are likely to show a strong move to the upside in early trading on Friday following the release of much better than expected jobs data. The major index futures are currently pointing to a sharply higher open for the markets, with the Dow futures up by 626 points.

The upward momentum on Wall Street comes following the release of a report from the Labor Department claiming employment in the U.S. unexpectedly showed a substantial rebound in the month of May.

The Labor Department said non-farm payroll employment jumped by 2.51 million jobs in May after plummeting by a revised 20.69 million jobs in April.

The rebound in employment came as a shock to economists, who had expected the loss of another 8.0 million jobs following the nosedive of 20.5 million jobs originally reported for the previous month.

With the unexpected rebound in employment, the Labor Department said the unemployment rate dropped to 13.3 percent in May from 14.7 percent in April. Economists had expected the unemployment rate to surge up to 19.8 percent.

The report claimed the improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain the spread of the disease.

Employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade, according to the Labor Department.

Following the strong upward move seen over the past several sessions, stocks turned in a relatively lackluster performance during trading on Thursday before eventually ending the day mixed.

While the Dow inched up 11.93 points or 0.1 percent to a three-month closing high of 26,281.82, the Nasdaq slid 67.10 points or 0.7 percent to 9,615.81 and the S&P 500 fell 10.52 points or 0.3 percent to 3,112.35.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index climbed by 0.7 percent, while Hong Kong's Hang Seng Index surged up by 1.7 percent.

The major European markets have also shown strong moves upside on the day. While the U.K.'s FTSE 100 Index has jumped by 1.5 percent, the German DAX Index and the French CAC 40 Index are up by 2.4 percent and 2.6 percent, respectively.

In commodities trading, crude oil futures are spiking $1.89 to $39.30 a barrel after inching up $0.12 to $37.41 a barrel on Thursday. Meanwhile, after jumping $22.60 to $1,727.40 an ounce in the previous session, gold futures are plummeting $39.40 to $1,688 an ounce.

On the currency front, the U.S. dollar is trading at 109.58 yen versus the 109.15 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1296 compared to yesterday's $1.1338.

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