Trade Worries May Overshadow Upbeat Jobs Data

By Investors Hub

The major U.S. index futures are pointing to a lower opening on Friday, with stocks likely to extend the move to the downside seen over the past few sessions.

The downward momentum on Wall Street comes even though the Labor Department released a report showing stronger than expected job growth in the month of August.

The data may have raised concerns about the outlook for interest rates, as the report also showed an unexpected acceleration in the rate of wage growth.

Lingering trade concerns may also weigh on the markets following the expiration of a public comment period on new U.S. tariffs on $200 billion worth of Chinese goods.

Traders are likely to keep a close on the President Donald Trump and his administration for news regarding the implementation of the proposed tariffs.

China’s Commerce Ministry has warned it will be forced to roll out necessary retaliatory measures if the U.S. adopts any new tariffs.

Adding to the worries about, Trump reportedly told a columnist for the Wall Street Journal he is ?still bothered by the terms of U.S. trade with Japan.?

Stocks moved mostly lower over the course of the trading day on Thursday, extending the decline seen over the two previous sessions. The Nasdaq posted another significant loss, although the Dow once again managed to close in positive territory.

While the Dow inched up 20.88 points or 0.1 percent to 25,995.87, the Nasdaq slumped 72.45 points or 0.9 percent to 7,922.73 and the S&P 500 fell 10.55 points or 0.4 percent at 2,878.05.

Technology stocks extended the sharp drop seen on Wednesday, contributing to the notable decline by the tech-heavy Nasdaq.

Traders appear to be expressing concerns that recent strength in the tech sector, which helped lift the Nasdaq and S&P 500 to record highs, may have been overdone.

The weakness on Wall Street also came following the release of a slew of U.S. economic data, including a report from payroll processor ADP showing private sector employment rose by less than expected in the month of August.

ADP said private sector employment climbed by 163,000 jobs in August after jumping by a revised 217,000 jobs in July. Economists had expected an increase of about 190,000 jobs.

“Although we saw a small slowdown in job growth the market remains incredibly dynamic,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

On Friday, the Labor Department is scheduled to release its more closely watched monthly jobs report, which includes both public and private sector jobs.

The report is expected to show employment increased by about 191,000 jobs in August after rising by 157,000 jobs in July. The unemployment rate is expected to dip to 3.8 percent from 3.9 percent.

In other economic news, the Institute for Supply Management released a report showing a much bigger than expected acceleration in the pace of growth in U.S. service sector activity in August.

The ISM said its non-manufacturing index jumped to 58.5 in August from 55.7 in July, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 56.8.

“There was a strong rebound for the non-manufacturing sector in August after growth ‘cooled off’ in July,” said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.

“Logistics, tariffs and employment resources continue to have an impact on many of the respective industries,” he added. “Overall, the respondents remain positive about business conditions and the economy.”

Traders also kept an eye out for developments regarding trade, as U.S. and Canadian officials continue to hold talks on reforming NAFTA.

Energy stocks moved sharply lower over the course of the session amid another steep drop by the price of crude oil. Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index plunged by 2.9 percent, the Philadelphia Oil Service Index plummeted by 2.5 percent and the NYSE Arca Oil Index slid by 1.6 percent.

Significant weakness was also visible among semiconductor stocks, as reflected by the 2.7 percent drop by the Philadelphia Semiconductor Index. The index pulled back further off the more than two-month closing high set on Tuesday.

Biotechnology stocks also saw considerable weakness on the day, dragging the NYSE Arca Biotechnology Index down by 2.1 percent. With the drop, the index continued to give back ground after reaching a record closing high a week ago.

Brokerage, networking, and computer hardware stocks also moved notably lower, while most of the other major sectors showed more modest moves.

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. Mr Olowookere can be reached via

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