Dipo Olowookere
By Investors Hub
The major U.S. index futures are currently pointing to a higher lower opening on Friday, as much stronger than expected jobs data washed away concerns about the economic outlook.
The futures climbed more firmly into positive territory following the release of a closely watched Labor Department report showing much stronger than expected job growth in the month of October.
The Labor Department said non-farm payroll employment climbed by 128,000 jobs in October compared to economist estimates for an increase of about 89,000 jobs.
The report also showed substantial upward revisions to job growth in September and August, with revised data showing employment jumped by 180,000 jobs and 219,000 jobs, respectively.
With the upward revisions, employment gains in September and August combined were 95,000 more than previously reported.
Despite the stronger than expected job growth, the report said the unemployment rate inched up to 3.6 percent in October from 3.5 percent in September. The uptick matched economist estimates.
The unemployment rate crept up from the nearly 50-year low hit in the previous month as a 325-person jump in the size of the labor force more than offset a 241,000-person increase in the household survey measure of employment.
After ending Wednesday’s trading moderately higher, stocks moved mostly lower over the course of the trading day on Thursday. With the drop on the day, the S&P 500 pulled back off Wednesday’s record closing high.
The major averages staged a recovery attempt going into the close but remained stuck in the red. The Dow slid 140.46 points or 0.5 percent to 27,046.23, the Nasdaq edged down 11.62 points or 0.1 percent to 8,292.36 and the S&P 500 fell 9.21 points or 0.3 percent to 3,037.56.
The pullback on Wall Street came amid renewed uncertainty about the potential for a long-term U.S.-China trade deal.
Optimism about phase one of a trade deal contributed to recent strength on Wall Street, but a new report from Bloomberg said Chinese officials are casting doubts about reaching a comprehensive long-term trade agreement.
People familiar with the matter told Bloomberg that Chinese officials have warned in private conversations that they are unwilling to budge on the thorniest issues.
In an apparent effort to calm the markets, President Donald Trump tweeted shortly before the start of trading that the U.S. and China are working on a new site to sign phase one of the trade deal.
Trump and Chinese President Xi Jinping had been due to meet and potentially sign the deal at the APEC summit in Chile, but the Chilean President recently called off the summit due to unrest in the country.
“China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled do to unrelated circumstances,” Trump tweeted. “The new location will be announced soon. President Xi and President Trump will do signing!”
In a separate tweet, Trump also claimed Democrats’ “Impeachment Hoax” is hurting the stock markets as the House voted to approve a resolution that establishes the procedure for the next phase of an impeachment inquiry.
Upbeat earnings news helped limit the downside for the markets, however, with Apple (AAPL) and Facebook (FB) posting notable gains after reporting better than expected quarterly results.
On the U.S. economic front, the Labor Department released a report showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended October 26th.
The report said initial jobless claims rose to 218,000, an increase of 5,000 from the previous week’s revised level of 213,000.
Economists had expected jobless claims to inch up to 215,000 from the 212,000 originally reported for the previous week.
A separate report from the Commerce Department showed personal income and spending both increased in line with economist estimates in the month of September.
The report said personal income increased by 0.3 percent in September after climbing by an upwardly revised 0.5 percent in August.
Meanwhile, the Commerce Department said personal spending edged up by 0.2 percent, matching the revised uptick seen in August.
Computer hardware stocks turned in some of the market’s worst performances on the day, dragging the NYSE Arca Computer Hardware Index down by 1.8 percent.
Western Digital (WDC) led the sector lower after the hard drive maker reported better than expected fiscal first quarter results but provided disappointing guidance and announced the retirement of its CEO Steve Milligan.
Significant weakness was also visible among oil service stocks, as reflected by the 1.5 percent drop by the Philadelphia Oil Service Index. The weakness in the oil service sector came amid a notable decrease by the price of crude oil.
Steel stocks also saw considerable weakness amid uncertainty about a U.S.-China trade deal, moving notably lower along with transportation, chemical and financial stocks.
On the other hand, gold stocks bucked the downtrend, resulting in a 2.7 percent jump by the NYSE Arca Gold Bugs Index. The index ended the session at its best closing level in over a month. The rally by gold stocks came amid a sharp increase by the price of the precious metal.
