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U.S. stocks seen breaking four-day losing streak, as jobs data looms

U.S. stock index futures were pointing higher on Friday, indicating Wall Street could break a four-day losing streak, though investors had one major hurdle to get through first — the October employment report.

How are stock-index futures trading?
  • S&P 500 futures
    rose 30.5 points, or 0.6%, to 3,753.25

  • Dow Jones Industrial Average futures
    climbed 207 points, or 0.6%, to 32,226

  • Nasdaq-100 futures
    rose 81.5 points, or 0.7%, to 10,809

On Thursday, the S&P 500
fell 39.80 points, or 1.1%, to finish at 3,719.89, the Dow Jones Industrial Average
 closed 146.51 points lower, down 0.5%, at 32,001.25, after dropping as much as 420 points at its session low. The Nasdaq Composite
shed 181.86 points, or 1.7%, to end at 10,342.94.

Need to know: Traders are loading up on bets against the stock market — and this time, it’s not a contrarian signal, says Citi

What’s driving markets?

All three major indexes are facing weekly losses, led by the Nasdaq, which was set for a 6.8% drop as of Thursday. That would mark the tech indexes second-worst week of 2022 and biggest percentage drop since the week ended Jan. 21, 2022, according to Dow Jones Market Data.

Stocks have faced pressure as Federal Reserve Chairman Jerome Powell made clear on Wednesday that they are nowhere near ending a campaign to raise interest rates.

The Fed hiked its benchmark rate by 75 basis points, as expected, and Powell told a news conference that it was “very premature to be thinking about pausing,” and that the fed-funds rate may need to stretch above 5% and stay there awhile to drag inflation back to its 2% target.

Read: Why the car market might be ‘the harbinger’ of when the Fed can pivot

Economic data will swing into focus for Friday, with the October employment report forecast to show an increase of 205,000 new jobs and a 3.5% unemployment rate. That would mark the smallest rise since end 2021, but would still be a strong report on a historical basis. But the report may not represent enough of a slowdown for Powell, say economists.

Average hourly earnings are expected to rise 0.3%. Annually those earnings are set to rise 4.7% noted strategists at Saxo Bank.

“Significantly surprises in the earnings data in either direction would likely drive a large market reaction,” the analysts said in a note.

While stock futures were higher, investors will remain on edge until the data is out, said Craig Erlam, senior market analyst at OANDA, in a note to clients.

“Not only was Powell’s caveat unexpected and unwelcome by investors, the labor market remains extremely healthy which means today’s report is likely to be red hot once more. If that doesn’t turn out to be the case, investors may start to see the upside to the Fed’s statements on Wednesday,” said Erlam.

Treasury yields continued to creep higher with the policy-sensitive 2-year rate
up 3 basis points to 4.742%, after hitting 4.699% on Thursday, the highest since July 25, 2007.

Oil prices were also climbing, with crude futures up over 2% to $90.60 a barrel, while the dollar backpedaled

Possibly fueling positive sentiment, the Hang Seng Index
closed up 5.3%, with tech stocks leading the way on fresh speculation China may ditch its zero COVID policies. Several U.S.-listed Chinese stocks were trading higher in premarket, such as Alibaba Inc.
up 9%, Bilibili Inc. 
 up almost 14% and Nio Inc.
 up nearly 11%.

What companies are in focus?
  • PayPal Holdings Inc.
    stock fell nearly 7% in premarket trading after the digital payments group cut its revenue forecast late Thursday.

  • Starbucks Corp.
    shares climbed 4.8% after the coffee giant posted forecast -beating results and said same-store sales will be “near the high end” of financial targets.

  • Cardinal Health Inc.
    shares were up 4.4% and moving towards a five-year high after the drug and laboratory products distributor reported big beats on profit and revenue and affirmed its outlook.

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