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Strong Jobs Data May Spark Early Rally On Wall Street

The major U.S. index futures are currently pointing to a sharply higher opening on Thursday, with stocks likely to extend a recent upward move.

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.

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.

The upward moves by the Nasdaq and S&P 500 came after drug giant Pfizer (PFE) and German biotech company BioNTech (BNTX) announced positive data from an early-stage human trial of a potential coronavirus vaccine.

The companies said the most advanced of four investigational vaccine candidates was generally well tolerated and produced neutralizing antibodies.

Pfizer, a Dow component, surged up by 3.2 percent on the news, but steep losses by Walgreens (WAG) and Exxon Mobil (XOM) weighed on the blue chip index.

Strong gains by Amazon (AMZN) and Netflix (NFLX) contributed to the advance by the Nasdaq, while FedEx (FDX) led the S&P 500 higher after reporting better than expected fiscal fourth quarter results.

Adding to the overall positive sentiment on Wall Street, the Institute for Supply Management released a report showing U.S. manufacturing activity unexpectedly expanded in the month of June.

The ISM said its purchasing managers index jumped to 52.6 in June from 43.1 in May, with a reading above 50 indicating an expansion in manufacturing activity.

Economists had expected the index to climb to 49.5, which have still indicated a modest contraction in manufacturing activity.

"As predicted, the growth cycle has returned after three straight months of COVID-19 disruptions," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

He added, "Demand, consumption and inputs are reaching parity and are positioned for a demand-driven expansion cycle as we enter the second half of the year."

A separate report released by payroll processor ADP showed a significant increase in private sector employment in the month of June as well as a substantial upward revision to the data for May.

ADP said private sector employment jumped by 2.369 million jobs in June, which was below economist estimates for a spike of about 3.000 million jobs.

However, revised data showed private sector employment soared by 3.065 million jobs in May compared to the previously reported loss of 2.760 million jobs.

Retail stocks showed a substantial move to the upside on the day, driving the Dow Jones U.S. Retail Index up by 2.3 percent to a new record closing high.

Significant strength was also visible among interest rate-sensitive utilities and commercial real estate stocks, with the Dow Jones Utility Average and the Dow Jones U.S. Real Estate Index jumping by 2.3 percent and 2.2 percent, respectively.

On the other hand, energy stocks saw considerable weakness on the day even though the price of crude oil closed higher.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service plunged by 2.9 percent and the NYSE Arca Oil Index tumbled by 2.5 percent.

Banking stocks also moved sharply lower over the course of the session, dragging the KBW Bank Index down by 2.7 percent.

Housing, networking and semiconductor stocks also saw notable weakness on the day, partly offsetting the strength in the aforementioned sectors.

Commodity, Currency Markets

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.

Asia

Asian stocks rose on Thursday on optimism about a potential coronavirus vaccine and amid signs that the global economy is emerging from the coronavirus lockdown.

Investors also looked ahead to the U.S. Labor Department's closely watched monthly employment report for June due later in the day for further clues about the health of the world's largest economy.

Chinese shares soared on signs the economy is gradually emerging from a sharp contraction. Sentiment was also bolstered by hopes of more government spending after the finance ministry said it would sell more special treasury bonds to fund public health-related infrastructure facilities.

The benchmark Shanghai Composite Index jumped 64.59 points, or 2.1 percent, to 3,090.57, while Hong Kong's Hang Seng Index soared 697.00 points, or 2.9 percent, to 25,124.19.

Japanese shares fluctuated before finishing marginally higher on hopes of an economic recovery. The Nikkei 225 Index edged up 24.23 points, or 0.1 percent, to 22,145.96, paring early gains after Tokyo reported a spike in Covid-19 cases. The broader Topix closed 0.3 percent higher at 1,542.76.

Japan's capital city of Tokyo confirmed more than 100 more novel coronavirus infections today, the highest daily tally in two months.

Toyota Motor gained 1.8 percent a day after U.S. electric carmaker Tesla overtook the company to become the world's most valuable auto company in terms of market capitalization.

Market heavyweight SoftBank Group advanced 1.4 percent, while Fast Retailing dropped 0.3 percent. Banks ended broadly higher, with Mitsubishi UFJ Financial and Sumitomo Mitsui Financial rising 0.8 percent and 1.4 percent, respectively.

Australian markets advanced, with promising results from a Covid-19 vaccine trial and encouraging data from the United States and China boosting sentiment.

The benchmark S&P/ASX 200 Index rallied 98.30 points, or 1.7 percent, to 6,032.70, while the broader All Ordinaries Index surged up 101.30 points, or 1.7 percent, to 6,142 30.

Healthcare stocks gained ground, with CSL adding 1.9 percent, while Cochlear climbed over 3 percent and Resmed gained 2.1 percent.

In the technology sector, Afterpay surged 9.5 percent as Citi raised its target price on the stock. Appen rallied 3.1 percent and WiseTech Global soared 6.2 percent.

Energy companies such as Woodside Petroleum, Santos and Origin Energy rose 1-2 percent on the back of overnight gains in oil prices on data showing a drawdown in U.S. crude inventories.

Qantas Airways rose over 1 percent. The airline said it is offering retail shareholders a 2.5 percent discount in a share purchase plan to raise A$500 million, following a A$1.4 billion placement to institutional investors that it completed last week.

In economic news, the Australian trade surplus increased to A$8.02 billion in May from A$7.83 billion in the previous month as a decline in imports exceeded a drop in exports, official data showed.

Seoul stocks rose sharply on hopes of a vaccine for Covid-19, which has killed more than half a million people globally. The benchmark Kospi jumped 28.67 points, or 1.4 percent, to 2,135.37, led by pharma stocks.

SK Biopharmaceuticals Co. spiked 30 percent on the day of its debut, while Samsung BioLogics surged 4.5 percent and Celltrion advanced 3.7 percent.

Europe

European stocks have rallied on Thursday as encouraging news on a vaccine for Covid-19 as well as upbeat manufacturing PMI data across the globe helped revive hopes for a quick economic recovery.

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.

Travel stocks have gained ground in London after reports that dozens of countries will be exempt from a travel quarantine beginning Monday.

Primark-owner Associated British Foods has also jumped. The company said that trading in its stores that have reopened after coronavirus lockdown has been "reassuring and encouraging".

Low-cost airline Wizz Air Holdings and Ryanair Holdings have also moved notably higher after unveiling their passenger traffic figures for June.

Meggitt has soared after the engineering company said that it is experiencing initial signs of recovery in commercial aerospace.

Fashion house Hugo Boss has also rallied after it appointed Tommy Hilfiger executive Oliver Timm as its chief sales officer.

French electric utility Engie has also jumped. The company has agreed to sell a 49 percent equity interest in a 2.3 GW US renewables portfolio to Hannon Armstrong. Engie will retain a controlling share in the portfolio and continue to manage the assets.

Meanwhile, scandal-hit Wirecard has plunged. Police and prosecutors have raided the headquarters of the beleaguered payments firm as part of a fraud investigation relating to its £1.7 billion accounting black hole.

On the data front, the euro area unemployment rate rose marginally in May, figures from Eurostat showed. The unemployment rate climbed to 7.4 percent in May from 7.3 percent in April. In the same period last year, the jobless rate was 7.6 percent.

U.S. Economic Reports

After reporting an unexpected jump in employment in the U.S. in the previous month, the Labor Department released a report on Thursday 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.

A separate report released by the Labor Department 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.

With the value of exports falling by much more than the value of imports, 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.

At 10 am ET, 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.

The Treasury Department is due to announce the details of this month's auctions of three-year and ten-year notes and thirty-year bonds at 11 am ET.

Stocks In Focus

Shares of Tesla (TSLA) are moving sharply higher in pre-market trading after the electric car maker revealed it delivered 90,650 vehicles in the second quarter of 2020, well above expectations. Wedbush Securities also raised its price target on Tesla's stock to $1,250 from $1,000.

Cosmetics company Coty (COTY) may also see initial strength after appointing beauty industry veteran Sue Y. Nabi as its new Chief Executive Officer, effective September 1st.

Shares of Nu Skin Enterprises (NUS) are also seeing significant pre-market strength after the health products company raised its second quarter revenue guidance.

Chinese electric car maker NIO Inc. (NIO) is also likely to move to the upside after delivering a record 3,740 vehicles in the month of June.

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