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U.S. Stocks Likely To Open Higher Following Strong Jobs Data

wallstreet sep4 02jul20 lt

Stocks are likely to move to the upside in early trading on Thursday as traders react to another much better than expected monthly jobs report. The major index futures are currently pointing to a sharply higher open for the markets, with the Dow futures up by 414 points.

Early buying interest is likely to be generated in reaction to a Labor Department report showing another record spike in employment in the month of June.

The report said non-farm payroll employment skyrocketed by 4.8 million jobs in June after soaring by an upwardly revised 2.7 million jobs in May.

Economists had expected employment to surge up by about 3.0 million jobs compared to the spike of 2.5 million jobs originally reported for the previous month.

The Labor Department also said the unemployment rate dropped to 11.1 percent in June from 13.3 percent in May. The unemployment rate had been expected to dip to 12.3 percent.

Meanwhile, a separate Labor Department report showed first-time claims for U.S. unemployment benefits fell by much less than expected in the week ended June 27th.

The Labor Department said initial jobless claims dropped to 1.427 million, a decrease of 55,000 from the previous week's revised level of 1.482 million.

Economists had expected jobless claims to tumble to 1.355 million from the 1.480 million originally reported for the previous week.

The report also showed an increase in continuing claims, a reading on the number of people receiving ongoing unemployment assistance, which climbed by 59,000 to 19.290 million in the week ended June 20.

Nonetheless, traders have recently favored an optimistic view of the economy, suggesting they will focus primarily on the monthly data.

In other U.S. economic news, the Commerce Department released a report showing the U.S. trade deficit widened more than expected in the month of May.

The Commerce Department said the trade deficit widened to $54.6 billion in May from a revised $49.8 billion in April.

Economists had expected the trade deficit to widen to $53.0 billion from the $49.4 billion originally reported for the previous month.

The wider than expected trade deficit came as the value of exports plunged by 4.4 percent to $144.5 billion, while the value of imports slid by 0.9 percent to $199.1 billion.

Shortly after the start of trading, the Commerce Department is scheduled to release its report on new orders for manufactured goods in the month of May. Factory orders are expected to spike by 8.7 percent in May after plunging by 13.0 percent in April.

While the Nasdaq and the S&P 500 moved notably higher over the course of the trading session on Wednesday, the Dow showed a lack of direction before closing in negative territory. The advance on the day lifted the tech-heavy Nasdaq to a new record closing high.

The Dow moved to the downside going into the close, ending the session down 77.91 points or 0.3 percent to 25,734.97. Meanwhile, the Nasdaq jumped 95.86 points or 1 percent to 10,154.63 and the S&P 500 climbed 15.57 points or 0.5 percent to 3,115.86.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index inched up by 0.1 percent, while China's Shanghai Composite Index spiked by 2.1 percent.

The major European markets have also shown strong moves to the upside on the day. While the U.K.'s FTSE 100 Index has jumped by 1.1 percent, the French CAC 40 Index and the German DAX Index are soaring by 2.1 percent and 2.3 percent, respectively.

In commodities trading, crude oil futures are rising $0.47 to $40.29 a barrel after climbing $0.55 to $39.82 a barrel on Wednesday. Meanwhile, after plunging $20.60 to $1,779.90 an ounce in the previous session, gold futures are falling $4.60 to $1,775.30 an ounce.

On the currency front, the U.S. dollar is trading at 107.53 yen versus the 107.47 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1275 compared to yesterday's $1.251.

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