U.S. Stocks May See Early Volatility Following Monthly Jobs Data

wallstreet sept06 03sep21 lt

Following the release of the Labor Department's closely watched monthly jobs report, stocks may show a lack of direction in early trading on Friday. The major index futures have fluctuated following the release of the report and are currently pointing to a slightly lower open for the markets.

Traders may be reluctant to make significant moves early on as they digest the repercussions of the Labor Department report, which showed much weaker than expected job growth in the month of August.

The Labor Department said non-farm payroll employment rose by 235,000 jobs in August after soaring by an upwardly revised 1.053 million jobs in July.

Economists had expected employment to jump by about 750,000 jobs compared to the spike of 943,000 jobs originally reported for the previous month.

Despite the much weaker than expected job growth, the unemployment rate fell to 5.2 percent in August from 5.4 percent in July, matching economist estimates.

While the substantial slowdown in the pace of job growth may raise concerns about the economic outlook, it may also ease concerns about the Federal Reserve scaling back stimulus in the near term.

Fed officials have indicated inflation has reached their target but they need to see further improvement in the labor market before they begin tapering asset purchases and raising interest rates.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of August.

The ISM's services PMI is expected to drop to 61.5 in August from 64.1 in July, although a reading above 50 would still indicate growth in the sector.

After seeing early strength, stocks gave back ground in afternoon trading on Thursday but still managed to end the session modestly higher. With the uptick, the Nasdaq and the S&P 500 finished the day at new record closing highs.

The major averages all closed in positive territory. The Dow climbed 131.29 points or 0.4 percent to 35,443.82, the Nasdaq inched up 21.80 points or 0.1 percent to 15,331.18 and the S&P 500 rose 12.86 points or 0.3 percent to 4,536.95.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan's Nikkei 225 Index spiked by 2.1 percent, while China's Shanghai Composite Index fell by 0.4 percent.

The major European markets have also turned mixed on the day. While the French CAC 40 Index has slid by 0.7 percent, the German DAX Index is just above the unchanged line and the U.K.'s FTSE 100 Index is up by 0.1 percent.

In commodities trading, crude oil futures are edging up $0.22 to $70.21 a barrel after jumping $1.40 to $69.99 a barrel on Thursday. Meanwhile, after falling $4.50 to $1,811.50 an ounce in the previous session, gold futures are climbing $13.40 to $1,824.90 an ounce.

On the currency front, the U.S. dollar is trading at 109.85 yen versus the 109.94 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1886 compared to yesterday's $1.1875.

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