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Beyond the Numbers

Futures Pointing To Continued Strength On Wall Street
12/3/2021 8:56 AM

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to extend the strong upward move seen in the previous session.

The futures remained positive even after the Labor Department released a closely watched report showing much weaker than expected U.S. job growth in the month of November.

The report said non-farm payroll employment rose by 210,000 jobs in November after surging by an upwardly revised 546,000 jobs in October.

Economists had expected employment to spike by 550,000 jobs compared to the jump of 531,000 jobs originally reported for the previous month.

Despite the much weaker than expected job growth, the unemployment rate slid to 4.2 percent in November from 4.6 percent in October. Economists had expected the unemployment rate to edge down to 4.5 percent.

With the much bigger than expected decrease, the unemployment rate fell to its lowest level since hitting 3.5 percent in February of 2020.

While the disappointing job growth may raise some concerns about the economic outlook amid the emergence of the Omicron variant of the coronavirus, the data may also help dissuade from the Federal Reserve from accelerating the tapering of its asset purchases.

Following the substantial downturn seen over the course of Wednesday’s session, stocks showed a strong move back to the upside during trading on Thursday. The major averages all finished the day firmly positive, with the Dow posting a particularly strong gain.

The Dow spiked 617.75 points or 1.8 percent to 34,639.79 and the S&P 500 jumped 64.06 points or 1.4 percent to 4,577.10. The tech-heavy Nasdaq showed a lack of direction early in the session but closed up 127.27 points or 0.8 percent at 15,381.32.

The rebound on Wall Street partly reflected bargain hunting following the steep drop seen as Wednesday's trading day progressed.

The significant downturn on Wednesday dragged the Dow down to a nearly two-month closing low, while the Nasdaq and S&P 500 hit their lowest closing levels in over a month.

The strong move to the upside extended the rollercoaster ride stocks have been on since news of the detection of omicron variant of the coronavirus.

Traders have seemed extremely sensitive to omicron-related news amid concerns the variant could derail the economic recovery even as the Federal Reserve begins scaling back stimulus.

The notable advance by the Dow was partly due to a strong gain by shares of Boeing (BA), with the aerospace giant jumping by 7.5 percent.

Boeing spiked following news China has cleared the 737 Max to return to flying, becoming the last major market to grant approval.

Additionally, a report from Bloomberg said the new owners of Jet Airways India Ltd. are in talks with Boeing and Airbus to purchase at least 100 narrowbody jets for the once-bankrupt carrier's fleet.

Dow components American Express (AXP) and Visa (V) also posted standout gains, with the credit card giants surging up by 4.5 percent and 4.3 percent, respectively.

In U.S. economic news, the Labor Department released a report showing a modest rebound by initial jobless claims in the week ended November 27th.

The report said initial jobless claims rose to 222,000, an increase of 28,000 from the previous week's revised level of 194,000.

Economists had expected jobless claims to climb to 240,000 from the 199,000 originally reported for the previous week.

Airline stocks showed a substantial rebound on the day, with the NYSE Arca Airline Index soaring by 6.5 percent after plummeting to its lowest closing level in a year in the previous session.

Considerable strength was also visible among housing stocks, as reflected by the 4.1 percent spike by the Philadelphia Housing Sector Index.

Banking stocks also turned in a strong performance, driving the KBW Bank Index up by 3.4 percent. The index bounced off a two-month closing low.

Steel, energy and brokerage stocks also saw significant strength, while gold stocks bucked the uptrend amid a decrease by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are surging $2.01 to $68.51 a barrel after climbing $0.93 to $66.50 a barrel on Thursday. Meanwhile, after slumping $21.60 to $1,762.70 an ounce in the previous session, gold futures are rising $9.80 to $1,772.50 an ounce.

On the currency front, the U.S. dollar is trading at 113.38 yen versus the 113.11 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 $1.1301.

Asia

Asian stocks reversed early losses to end broadly higher on Friday amid hopes that the Omicron Covid-19 variant would prove to be milder than previous strains and existing vaccines can hold up against it.

Chinese shares advanced after the latest survey from Caixin showed the services sector in China continued to expand in November, albeit at a slower pace, with a PMI score of 52.1, down from 53.8 in October.

The benchmark Shanghai Composite Index gained 33.60 points, or 0.9 percent, to finish at 3,607.43, while Hong Kong's Hang Seng Index dipped 22.24 points, or 0.1 percent, to end at 23,766.69.

Japanese shares rallied as the yen weakened and a survey showed the services sector in the country expanded at a faster pace in November. The Nikkei 225 Index jumped 276.20 points, or 1.0 percent, to 28,029.57, while the broader Topix closed 1.6 percent higher at 1,957.86.

Among the top gainers, Kawasaki Kisen Kaisha soared 12.9 percent, Dentsu surged 5.6 percent and Mitsui O.S.K. Lines added 5.3 percent.

Seoul stocks rose for the third day running on strong foreign buying. The Kospi climbed 23.06 points, or 0.8 percent, to 2,968.33 as health authorities strengthened virus curbs amid spiking Covid-19 cases. Lender Kakao Bank jumped 3.9 percent, while chipmaker SK Hynix lost 1.7 percent.

Australian markets eked out modest gains, with banks and energy stocks pacing the gainers. The benchmark S&P/ASX 200 Index inched up 16 points, or 0.2 percent, to 7,241.20, while the broader All Ordinaries Index ended up 7.50 points at 7,543.60.

Woodside Petroleum, Santos and Oil Search climbed 1-3 percent as oil extended overnight gains after the OPEC decision to stick to their existing policy of monthly oil output increases.

The big four banks rose between 0.7 percent and 1.3 percent. On the losing side, TPG Telecom slumped 8.6 percent after Chairman David Teoh cut his stake in the telecom giant.

Europe

European stocks have moved higher on Friday after fluctuating throughout the week on worries over inflation and the potential impact of the newly detected coronavirus variant.

While the French CAC 40 Index has risen by 0.3 percent, the U.K.’s FTSE 100 Index and the German DAX Index are both up by 0.5 percent.

In economic news, IHS Markit's Flash Composite Purchasing Managers' Index (PMI) rose to 55.4 in November from 54.2 in October. However, that was below an earlier 55.8 "flash" estimate.

The IHS Markit/CIPS UK Services Purchasing Managers' Index (PMI) fell to 58.5 in November from 59.1 in October.

French industrial production rebounded in October, largely led by a strong recovery in the manufacture of transport equipment, preliminary data from the statistical office INSEE showed.

Industrial production grew 0.9 percent from September, when it decreased 1.5 percent. Economists had forecast 0.5 percent gain.

British fund supermarket Hargreaves Lansdown has risen after an announcement that it will appoint Amy Stirling as chief financial officer (CFO) to succeed Philip Johnson.

Travel stocks are also moving higher despite fresh curbs in Germany, the Netherlands and elsewhere to prevent the spread of the new variant.

BP Plc and Royal Dutch have also jumped, tracking higher oil prices after OPEC+ said it would review supply additions ahead of its next meeting if Omicron dents demand.

German insurer Allianz has also shown a strong move to the upside after raising its mid-term targets and announcing a new dividend policy.

Nordex has also moved higher after securing a deal to supply 67 turbines for the 300MW El Sauz onshore wind farm in the U.S. state of Texas.

Copper producer Aurubis has also shown a significant advance after reporting a 60 percent jump in full-year operating earnings.

U.S. Economic Reports

A closely watched report released by the Labor Department on Friday showed employment in the U.S. increased by much less than expected in the month of November.

The report said non-farm payroll employment rose by 210,000 jobs in November after surging by an upwardly revised 546,000 jobs in October.

Economists had expected employment to spike by 550,000 jobs compared to the jump of 531,000 jobs originally reported for the previous month.

Despite the much weaker than expected job growth, the unemployment rate slid to 4.2 percent in November from 4.6 percent in October. Economists had expected the unemployment rate to edge down to 4.5 percent.

With the much bigger than expected decrease, the unemployment rate fell to its lowest level since hitting 3.5 percent in February of 2020.

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

The ISM’s services PMI is expected to dip to 65.0 in November from 66.7 in October, although a reading above 50 would still indicate growth in the sector.

The Commerce Department is also due to release its report on new orders for manufactured goods in the month of October at 10 am ET. Factory orders are expected to increase by 0.5 percent.

Stocks In Focus

Shares of Marvell Technology (MRVL) are soaring in pre-market trading after the semiconductor company reported fiscal third quarter results that exceeded analyst estimates on both the top and bottom lines.

Cosmetics retailer Ulta Beauty (ULTA) is also likely to see initial strength after reporting better than expected fiscal third quarter results and raised its full-year forecast.

On the other hand, shares of DocuSign (DOCU) are plummeting in pre-market trading after the e-signature company reported fiscal third quarter results that beat expectations but provided disappointing revenue guidance.

Discount retailer Ollie's Bargain Outlet (OLLI) may also come under pressure after reporting weaker than expected fiscal third quarter results due to supply chain issues.
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