Modupe Gbadeyanka
By Investors Hub
The major US index futures are pointing to a higher on Monday, with stocks poised to extend the upward trend seen over the past several sessions.
The markets may benefit from recent upward momentum, which has helped drive the major averages to record highs.
Trading activity may be somewhat subdued, however, as some traders may be away from their desks due to the Columbus Day holiday.
With traders digesting the closely watched monthly jobs report, stocks turned in a relatively lackluster performance during trading on Friday. The major averages eventually ended the day on opposite sides of the unchanged line.
While the tech-heavy Nasdaq inched up 4.82 points or 0.1 percent to a new record closing high of 6,590.18, the Dow edged down 1.72 points or less than a tenth of a percent to 22,773.67 and the S&P 500 dipped 2.74 points or 0.1 percent to 2,549.33.
Despite the mixed performance on the day, the major averages all posted strong gains for the week. The Dow surged up by 1.6 percent, while the Nasdaq and the S&P 500 jumped by 1.5 percent and 1.2 percent, respectively.
The mixed close came following the release of a report from the Labor Department showing an unexpected decrease in employment in the U.S. in the month of September.
The report said non-farm payroll employment fell by 33,000 jobs in September after climbing by an upwardly revised 169,000 jobs in August. Economists had expected employment to rise by 90,000 jobs.
The Labor Department said a sharp decline in employment in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Harvey and Irma.
Despite the unexpected drop in employment, the unemployment rate dipped to 4.2 percent in September from 4.4 percent in August. Economists had expected the unemployment rate to hold at 4.4 percent.
With the unexpected decrease, the unemployment rate fell to its lowest level since hitting a matching rate in February of 2001.
The report also showed a notable acceleration in the pace of wage growth, as average hourly employee earnings were up by 2.9 percent year-over-year in September compared to 2.5 percent in August.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said the 0.5 percent monthly increase in wages came as many low-paid restaurant workers were temporarily out of a job.
“Overall, the Fed and the markets will just ignore this report,” Ashworth said. “If past-storms, particularly Katrina, are any guide, employment will rebound markedly over the next few months.”
He added, “The drop in the unemployment rate might persist, however, with consumer and small business surveys both pointing to a drop in the unemployment rate to nearer 4% for some time.”
Traders may have been reluctant to make significant moves following the recent upward trend, with the drop by the S&P 500 snapping an eight-day winning streak.
Most of the major sectors showed only modest moves on the day, although energy stocks saw considerable weakness amid a steep drop by the price of crude oil.
Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index slumped by 1.4 percent, the NYSE Arca Natural Gas Index slid by 1.3 percent and the NYSE Arca Oil & Gas Index fell by 0.9 percent.
On the other hand, gold stocks showed a strong move to the upside, driving the NYSE Arca Gold Bugs Index up by 1.3 percent.
