Upbeat Jobs Data May Generate Early Buying Interest

February 4, 2017

The major U.S. index futures are pointing to a higher open on Friday following the release of a report from the Labour Department showing stronger than expected job growth in the month of January. The data is likely to add to optimism about the outlook for economy.

The markets may also benefit from analyst comments suggesting that the slowdown in the annual rate of wage growth shown in the report will lead the Federal Reserve to leave interest rates unchanged at its next meeting in March.

Stocks showed a lack of direction throughout much of the trading session on Thursday after recovering from an initial move to the downside. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the session mixed. While the S&P 500 inched up 1.30 points or 0.1 percent at 2,280.85, the Dow edged down 6.03 points or less than a tenth of a percent to 19,884.91 and the Nasdaq dipped 6.45 points or 0.1 percent to 5,636.20.

The choppy trading on Wall Street came amid uncertainty about the monthly jobs report as well as the impact of President Donald Trump’s policies.

Ahead of the monthly jobs report, the Labour Department released a report showing a bigger than expected drop in first-time claims for U.S. unemployment benefits in the week ended January 28th.

The report said initial jobless claims dropped to 246,000, a decrease of 14,000 from the previous week’s revised level of 260,000. Economists had expected jobless claims to dip to 253,000.

A separate report released by the Labour Department this morning showed a continued increase in labour productivity in the fourth quarter.

The report said productivity climbed by 1.3 percent in the fourth quarter after surging up by a revised 3.5 percent in the third quarter. Economists had expected productivity to increase by 1.0 percent.

The Labour Department also said unit labor costs surged up by 1.7 percent in the fourth quarter following a 0.2 percent uptick in the previous quarter. Costs had been expected to jump by 1.9 percent.

Meanwhile, reports of a contentious call between Trump and Australian Prime Minister Malcolm Turnbull have raised some concerns about relations with key allies under the new administration.

Trump also said Iran has been “put on notice” after conducting a ballistic missile test, further sparking some geopolitical concerns.

Most of the major sectors ended the day showing only modest moves, contributing to the roughly flat close by the broader markets.

Gold stocks moved sharply higher, however, with the NYSE Arca Gold Bugs Index surging up by 2.3 percent. With the jump, the index reached a nearly three-month closing high.

Considerable strength was also visible among natural gas stocks, as reflected by the 1.6 percent gain posted by the NYSE Arca Natural Gas Index. The index rebounded after ending the previous session at its lowest closing level in well over two months.

Steel and commercial real estate stocks also saw notable strength on the day, while weakness was visible among telecom and brokerage stocks.

Modupe Gbadeyanka

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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