ga('send', 'pageview');

Upbeat Jobs Data May Lead to Continued Strength on Wall Street

By Investors Hub

The major U.S. index futures are pointing to a higher opening on Thursday, with stocks likely to see further upside after climbing to new record closing highs in the previous session.

Early buying interest may be generated in reaction to a report from payroll processor ADP showing private sector employment jumped by much more than expected in the month of December.

Overall trading activity may be somewhat subdued, however, with some traders likely to stay on the sidelines ahead of the release of the Labor Department?s more closely watched monthly jobs report on Friday.

The report is expected to show an increase of about 190,000 jobs in December following the jump of 228,000 jobs in November. The unemployment rate is expected to hold at 4.1 percent.

Stocks moved mostly higher during trading on Wednesday, adding to the gains posted on Tuesday. With the continued upward move on the day, the major averages climbed to new record closing highs.

The major averages finished the day firmly in positive territory. The Dow rose 98.67 points or 0.4 percent to 24,922.68, the Nasdaq advanced 58.63 points or 0.8 percent to 7,065.53 and the S&P 500 climbed 17.25 points or 0.6 percent to 2,713.06.

ALSO READ  Profit Taking May Contribute to Initial Weakness on Wall Street

The continued strength on Wall Street came as upbeat data added to recent optimism about the economic outlook.

A report released by the Institute for Supply Management showed growth in manufacturing activity unexpectedly accelerated in the month of December.

The ISM said its purchasing managers index rose to 59.7 in December from 58.2 in November, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to edge down to 58.1.

“This indicates growth in manufacturing for the 16th consecutive month, led by strong expansion in new orders and production,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

A separate report from the Commerce Department showed a bigger than expected increase in construction spending in the month of November.

The Commerce Department said construction spending climbed by 0.8 percent to an annual rate of $1.257 trillion in November from a revised $1.247 trillion in October. Economists had expected spending to rise by 0.5 percent.

ALSO READ  BudgIT Faults $50 Oil Benchmark for 2018 Budget

Stocks remained positive following the release of the minutes of the Federal Reserve’s latest monetary policy meeting.

The minutes of the December meeting showed most participants reiterated their support for continuing a gradual approach to raising interest rates.

Almost all participants agreed with the decision to raise rates by 25 basis points at the meeting, although a couple wanted to leave rates unchanged until the actual rate of inflation had moved further toward the Fed’s 2 percent longer-run objective.

While low inflation is seen as transitory, some Fed members were concerned “that inflation might stay below the objective for longer than they currently expected.”

Meanwhile, the Fed said it raised its economic projections due to the massive tax reform bill passed by Republicans and signed by President Donald Trump.

“Overall, Fed officials re-affirmed at this meeting that they anticipate raising interest rates three times in 2018, matching the tightening in 2017,” said Paul Ashworth, Chief U.S. Economist at Capital Economics.

ALSO READ  Nigerian Bakers Threaten Nationwide Strike

He added, “But we still anticipate that a slightly faster than expected rebound in core inflation will mean we eventually see four rate hikes in 2018.”

Oil service stocks showed a substantial move to the upside on the day, driving the Philadelphia Oil Service Index up by 2.4 percent. With the jump, the index reached its best closing level in over eight months. The rally by oil service stocks came amid a sharp increase by the price of crude oil.

Significant strength was also visible among housing stocks, as reflected by the 2.4 percent gain posted by the Philadelphia Housing Sector Index. The advance lifted the index to a record closing high.

Computer hardware, semiconductor, internet and biotechnology stocks also saw considerable strength, contributing to the upward move by the tech-heavy Nasdaq.

On the other hand, airline, utilities, and gold stocks bucked the uptrend that was shown by the broader markets on the day.

Related Articles

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

more recommended stories

%d bloggers like this: