Dow futures traded near the flat line in early trading Friday following September’s disappointing jobs report.
Futures contracts tied to the Dow Jones Industrial Average rose just 13 points. S&P 500 futures were rose 0.2%. Nasdaq 100 futures rose 0.58%. The 10-year Treasury yield was around 1.57%.
Friday’s jobs report signaled a mixed picture for investors. The economy added just 194,000 jobs in September, well below the the Dow Jones estimate of 500,000, the Labor Department reported. This is the second big miss in a row for nonfarm payrolls after August totaled 235,000 added jobs, significantly below the consensus estimate of 720,000.
A bleaker labor picture could stall the Federal Reserve, as it prepares to slow its $120 billion-per-month bond-buying program.
On the positive side, the unemployment rate fell to 4.8%, against the expectation for 5.1%. And wages increased sharply. The monthly gain of 0.6% pushed the year-over-year increase to 4.6%.
“This should be more than sufficient to keep tapering on schedule for the November announcement… wage inflation only adds to the Fed’s argument for tapering,” said Ian Lyngen, BMO’s head of U.S. rates. “Overall, a mixed report that does little to shift the macro narrative.”
The Department of Labor said Thursday that jobless claims for the prior week totaled 326,000. That was lower than the 345,000 economists had been calling for. Continuing claims, meanwhile, declined by 97,000 to 2.71 million.
Stocks advanced during regular trading on Thursday as Washington reached a deal to raise the debt ceiling into December. The Dow gained about 340 points, or 0.98%, for its third straight positive session. The S&P 500 and Nasdaq Composite also advanced for a third day, gaining 0.83% and 1.05%, respectively. The three major averages are on track to finish the week in the green.
“The last appetizer to Friday’s nonfarm payroll report was a positive weekly jobless claims report,” said Edward Moya, senior market analyst at Oanda. “As the US continues to get the delta variant spread under control, the labor market recovery should continue to improve.”
Uncertainty around the debt ceiling had been a headwind for the market but other risks remain, including accelerating inflation and rising rates. The 10-year Treasury yield was around 1.57% on Thursday, and UBS sees it rising to 1.8% by the end of the year.
“A steadily improving US labor market and solid US economic growth should provide the Federal Reserve with the green light to start curbing its quantitative easing (QE) program,” the firm wrote in a note to clients.
Wall Street is also preparing for third-quarter earnings season, which kicks off next week.
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