Modupe Gbadeyanka
The major U.S. index futures are pointing to a higher opening on Friday following the release of the Labor Department’s closely watched monthly jobs report. The upward momentum on Wall Street comes as the report showed much stronger than expected job growth in the month of July.
The data is likely to generate optimism about the economic outlook, although it may also raise concerns about the possibility of future interest rate hikes.
Stocks showed a lack of direction during trading on Thursday, extending the lackluster performance seen in the previous session. Despite the choppy trading, the Dow climbed to another new record closing high.
The major averages ended the day on opposite sides of the unchanged line. While the Dow inched up 9.86 points or less than a tenth of a percent to 22,026.10, the Nasdaq fell 22.30 points or 0.4 percent to 6,340.34 and the S&P 500 dipped 5.41 points or 0.2 percent to 2,472.16.
Traders seemed reluctant to make significant moves ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.
A report released by the Labor Department before the start of trading on Thursday showed a modest decrease in first-time claims for unemployment benefits in the week ended July 29th.
The report said initial jobless claims dipped to 240,000, a decrease of 5,000 from the previous week’s revised level of 245,000. Economists had expected jobless claims to edge down to 242,000.
The Institute for Supply Management released a separate report showing a notable slowdown in the pace of service sector growth in the month of July.
The ISM said its non-manufacturing index dropped to 53.9 in July from 57.4 in June, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to dip to 57.0.
Meanwhile, the Commerce Department released a report showing a substantial increase in factory orders in the month of June.
Overseas, the Bank of England kept its record low interest rate unchanged in a split vote, as expected, and maintained the size of monetary stimulus.
The Monetary Policy Committee, headed by Governor Mark Carney, voted 6 to 2 to keep the interest rate at an historic low of 0.25 percent.
The bank downgraded its economic growth projections for 2017 to 1.7 percent from 1.9 percent and for 2018 to 1.6 percent from 1.7 percent. The outlook for 2019 was maintained at 1.8 percent.
Most of the major sectors showed only modest moves on the day, contributing to the lackluster performance by the broader markets.
Telecom stocks saw substantial weakness, however, with the NYSE Arca North American Telecom Index plunging by 3.5 percent. The index pulled back off its best closing level in nearly two months.
Broadband provider Windstream Holdings (WIN) posted a particularly steep loss after eliminating is quarterly dividend.
Considerable weakness also emerged among natural gas stocks, as reflected by the 3.1 percent drop by the NYSE Arca Natural Gas Index. The index ended the session at its lowest closing level in over a month.
Oil, biotechnology and banking stocks also moved to the downside on the day, while some strength was visible among railroad and networking stocks.
