Wall Street Stock Futures Turn Positive Ahead of Key Jobs Report

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Key Takeaways

• Equity futures trade fairly positive ahead of Friday’s non-farm payrolls report
• Thursday’s gains lifted the S&P500 to another fresh record

Futures contracts tied to the main US stock benchmarks are trading modestly higher, holding slightly above the flatline in the pre-market session on Friday. Wall Street and market participants today are awaiting the key June jobs report that will provide another glimpse at the state of recovery of the US economy.

Dow Jones futures in the overnight session traded mildly positive, up about 50 points, while S&P futures were higher by 0.15%. Nasdaq futures dipped under the flatline but later emerged above and floated about 30 points to the upside, or 0.20%.

Market participants are bracing for volatility across asset classes, including currencies, stocks, bonds, and commodities. The financial markets today await the Labor Department’s significant jobs report, released every first Friday of the month. The reading will reveal how many new jobs were added by employers for June.

Economists surveyed by Dow Jones expect the labor force to grow by around 700,000 new workers, while they project the unemployment rate to fall to 5.6% from 5.8% in May. The higher reading, relative to May’s 559,000 new jobs created, would signal the economic recovery is gathering pace despite fears of inflation and concerns about the spread of the contagious Delta strain of the coronavirus.

Bitcoin Remains Struggling

In another optimistic sign pointing to a steady recovery, the Labor Department yesterday released its initial weekly jobless claims report. Filings for jobless benefits fell by 51,000 to 364,000, a new pandemic bottom.

Apart from traders and investors closely monitoring today’s jobs report, the figures will be scrutinized by the Federal Reserve. A higher reading could trigger the US central bank to become more aggressive about reducing its asset purchases, which currently stand at $120bn a month. On the other hand, if hiring in June fails to build on the previous report, the Fed will most likely maintain its ample monetary support until the labor market recovers to a greater extent.

Risks remain on both sides of the jobs data. In case the report is too hot, the Fed’s decision to bring forward its tapering process could dent the high valuations of stocks. In contrast, a disappointing report would mean the Fed will most likely perform no changes to its approach to the economy, thus exposing it to bigger risks of inflation as the ample amounts of money flowing in the system could cause prices to rise too fast.

Despite looming risks, Wall Street equities performed well during Thursday’s session. A fairly muted trading lifted stocks higher, pushing the S&P500 to a new record in its sixth straight day of gains. So far in the week, major stock indexes have extended their robust performance in 2021. For the week, the tech-focused Nasdaq Composite is leading the pack, higher by 1.1% as of Thursday’s closing level. The broad-based S&P500 was higher by 0.9%, while the 30-stock blue-chip Dow Jones index was up 0.6%, for the same period.

In overseas stock markets, the pan-continental Stoxx Europe 600 advanced on Thursday and gained 0.62%, boosted by a rally in oil-and-gas stocks. Japan’s Nikkei 225 fell 0.3% in its fourth straight day of losses. China’s Shanghai Composite edged lower by about 0.1%.

In cryptocurrency, bitcoin’s price still struggles to sustain a solid move to the upside. The flagship digital currency ended Thursday’s action lower by 3.4% as the price gravitated toward the $33,300 region.