Futures Move Higher Following Weaker Than Expected Jobs Data

(RTTNews) - The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to see further upside following the notable advance seen in the previous session.

The futures advanced following the release of a closely watched Labor Department report showing employment in the U.S. rose by much less than expected in the month of August.

The report said non-farm payroll employment crept up by 22,000 jobs in August after climbing by an upwardly revised 79,000 jobs in July.

Economists had expected employment to increase by 75,000 jobs compared to the addition of 73,000 jobs originally reported for the previous month.

The report also showed the uptick of 14,000 jobs that had been reported for June was downwardly revised to a decrease of 13,000 jobs.

The Labor Department said job growth in the healthcare and social assistance sector in August was partly offset by job losses in federal government and in mining, quarrying, and oil and gas extraction.

Meanwhile, the Labor Department said the unemployment rate inched up by 4.3 percent in August from 4.2 in July, in line with economist estimates.

While the report adds to recent signs of weakness in the labor market, the data is also likely to increase confidence the Federal Reserve will lower interest rates later this month.

CME Group's FedWatch Tool is currently indicating a 98.1 percent chance the Fed will lower interest rates by 25 basis points at its September 16-17 meeting.

Stocks moved notably higher over the course of the trading day on Thursday, with the major averages all showing strong moves to the upside after showing a lack of direction early in the session. With the upward move, the S&P 500 ended the day at a new record closing high.

The major averages finished the day just off their highs of the session. The Nasdaq jumped 209.97 points or 1.0 percent to 21,707.69, the S&P 500 advanced 53.82 points or 0.8 percent to 6,502.08 and the Dow climbed 350.06 points or 0.8 percent to 45,621.29.

The strength that emerged on Wall Street came as traders digested the latest U.S. economic data, including a report from payroll processor ADP showing weaker than expected private sector job growth in the month of August.

ADP said private sector employment rose by 54,000 jobs in August after jumping by an upwardly revised 106,000 jobs in July.

Economists had expected private sector employment to rise by 65,000 jobs compared to the addition of 104,000 jobs originally reported for the previous month.

The Labor Department also released a report showing first-time claims for U.S. unemployment benefits rose by more than expected in the week ended August 30th.

The report said initial jobless claims climbed to 237,000, an increase of 8,000 from the previous week's unrevised level of 229,000. Economists had expected jobless claims to inch up to 230,000.

With the bigger than expected increase, jobless claims reached their highest level since hitting a matching figure in the week ended June 21st.

"We continue to see softness growing in the labor market as tariff policy uncertainty lingers, immigration changes take effect, and AI adoption grows," said Eric Teal, Chief Investment Officer for Comerica Wealth Management.

He added, "The silver-lining is the weaker the jobs data the more cover there is for stimulative interest rate cuts that are on the horizon."

Computer hardware stocks moved sharply higher over the course of the session, driving the NYSE Arca Computer Hardware Index up by 3.5 percent to a record closing high.

Substantial strength was also visible among networking stocks, with the NYSE Arca Networking Index surging by 3.2 percent. The index also ended the day at a record closing high.

Ciena (CIEN) helped to lead the sector higher, soaring by 23.3 percent after reporting better than expected fiscal third quarter results.

Oil service, housing and retail stocks also saw significant strength on the day, while airline stocks came under considerable selling pressure as the day progressed.

Commodity, Currency Markets

Crude oil futures are slumping $0.69 to $62.79 a barrel after falling $0.49 to $63.48 a barrel on Thursday. Meanwhile, after sliding $28.80 to $3,606.70 an ounce in the previous session, gold futures are jumping $36.60 to $3,643.30 an ounce.

On the currency front, the U.S. dollar is trading at 147.42 yen versus the 148.49 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1733 compared to yesterday's $1.1649.

Asia

Asian stocks moved mostly higher on Friday, as weak U.S. labor market data reinforced expectations of a Federal Reserve rate cut later this month and U.S. President Donald Trump signed an executive order officially putting into action the U.S.-Japan trade agreement.

Regional gains, however, remained capped due to caution ahead of key U.S. jobs data due later in the day and amid concerns over Trump's heavy use of tariffs.

Trump said Thursday the United States would soon put a "fairly substantial tariff" on semiconductors coming into the country after previously threatening a 100-percent levy on the chips.

Chinese shares rebounded after falling by the most in five months on Thursday following reports that the country's financial regulators are considering a number of cooling measures for the stock market.

The benchmark Shanghai Composite Index rallied 1.2 percent to 3,812.51 on hopes that Beijing can keep stock prices rising while avoiding speculative bubbles. Hong Kong's Hang Seng Index surged 1.4 percent to 25,417.98.

Japanese markets rose sharply, with auto and technology stocks leading the surge after Trump signed the executive order cutting the tariff on the country's automotive imports.

Investors also cheered data that showed Japanese household spending rose by an annual 1.4 percent in July, up slightly from the previous month's 1.3 percent increase.

The Nikkei 225 Index jumped 1.0 percent to 43,018.75, while the broader Topix Index settled 0.8 percent higher at 3,105.31.

Seoul stocks ended higher for a fourth consecutive session, with the Kospi inching up 0.1 percent to 3,205.12. SK Hynix climbed 3 percent while Samsung Electronics declined 0.9 percent.

Hyundai Motor shed 0.7 percent after reports that up to 450 workers at a Hyundai Motor facility under construction in Georgia have been detained in a raid by U.S. authorities in a major immigration enforcement operation.

Australian stocks closed higher, led by gains across big four banks, consumer discretionary, real estate and gold stocks.

The benchmark S&P/ASX 200 Index rose 0.5 percent to 8,871.20 but posted its first weekly decline after rising for four consecutive weeks. The broader All Ordinaries Index closed up 0.5 percent at 9,140.50.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index climbed 0.7 percent to 13,223.53, extending gains from the previous session to reach a two-week high.

Europe

European stocks are modestly higher on Friday as investors digest the key U.S. jobs data and look ahead to French Prime Minister Francois Bayrou's confidence vote on Monday.

Media reports suggest that French President Emmanuel Macron wants to move quickly to name a new prime minister following the government's likely collapse.

Meanwhile, German factory orders declined for the third straight month in July, figures from Destatis revealed. New orders fell 2.9 percent month-on-month in July, confounding expectations for an increase of 0.5 percent.

The decrease was also sharper than the 0.2 percent dip posted in June. Further, this was the fastest decline since January, when prices dropped 5.4 percent.

Elsewhere, U.K. retail sales rose by 0.6 percent in July versus expectations of a 0.2 percent uptick, as shoppers splashed out on clothing and footwear, the Office for National Statistics reported.

U.K. house prices rose for the third consecutive month on the back of falling mortgage rates and continued wage growth, according to the Halifax house price index data. The value of a typical home rose 0.3 percent in August when compared to July.

While the U.K.'s FTSE 100 Index is up by 0.3 percent, the German DAX Index and the French CAC 40 Index are both up by 0.1 percent.

German utility E.ON has moved to the upside after it signed an agreement to sell its Czech subsidiary Gas Distribution s.r.o. to GasNet.

British housebuilder Berkeley Group has also risen after reporting "stable" trading over the first four months of its financial year and maintaining its earnings guidance.

Tullow Oil has moved sharply higher after naming oil and gas industry veteran Ian Perks as its new CEO.

Hexagon AB shares have also surged. U.S. technology firm Cadence has agreed to acquire the Design & Engineering (D&E) division of Hexagon for around €2.7bn ($3.14bn).

Meanwhile, Ashmore Group shares have tumbled. The emerging markets-focused asset manager reported a 15 percent fall in annual profit before tax on the back of weaker fee income.

U.S. Economic News

Employment in the U.S. rose by much less than expected in the month of August, the Labor Department revealed in a closely watched report released on Friday.

The report said non-farm payroll employment crept up by 22,000 jobs in August after climbing by an upwardly revised 79,000 jobs in July.

Economists had expected employment to increase by 75,000 jobs compared to the addition of 73,000 jobs originally reported for the previous month.

The report also showed the uptick of 14,000 jobs that had been reported for June was downwardly revised to a decrease of 13,000 jobs.

The Labor Department said job growth in the healthcare and social assistance sector in August was partly offset by job losses in federal government and in mining, quarrying, and oil and gas extraction.

Meanwhile, the Labor Department said the unemployment rate inched up by 4.3 percent in August from 4.2 in July, in line with economist estimates.