U.S. stock–index futures pared losses Friday, pointing to a flat open after a report from the Labor Department showed the U.S. economy adding a less-than-expected 155,000 jobs in November—data investors are parsing ahead of the Federal Reserve’s last rate-setting gathering of 2018.
How are the benchmarks performing?
On Thursday, the Dow DJIA, +0.36% declined 79.40 points, or 0.3%, to 24,947.67, though the index was down by as many as 785 points at its nadir. The S&P 500 index SPX, +0.25% dropped 4.11 points, 0.2%, to 2,696.95, and the Nasdaq Composite Index COMP, -0.10% fell 29.83 points, or 0.4%, to 7,188.26.
For the week, the Dow and S&P 500 are set to show declines of 2.3%, while the Nasdaq has thus far declined 1.9%.
The Thursday afternoon rebound put the Dow and the S&P back into positive territory for 2018, while the Nasdaq built on its gains to rise 4.1% for the year.
What’s driving the market?
The jobs report also showed the unemployment rate holding steady at 3.7%, as expected. Average hourly earnings grew at 6 cents per hour from October, or 0.2%, just shy of expectations, and grew by 3.1% year-over-year, their highest rate since 2009.
The jobs numbers are of particular importance to investors, as these data will inform The Federal Reserve’s interest-rate-setting committee, the FOMC, as it prepares to decide whether to raise interest rates at its coming meeting Dec. 18-19.
Signs that the FOMC may take a less aggressive tack in normalizing rates have increased, with The Wall Street Journal on Thursday reporting that Fed officials are considering a new wait-and-see mentality at that December meeting.
Expectations for a December interest-rate increase are showing a 76.6% probability, down from 83% a week ago, according to CME Group data, with expectations increasing that policy makers may cool the rate-hike path in 2019.
The jobs data come after a frenetic session that had been colored by fears of intensifying trade battles between the U.S. and China. That was after the arrest in Canada of a top Chinese tech executive at China telecommunications giant Huawei Technologies, which amplified worries in a market already skittish about relations between Beijing and Washington on tariffs and intellectual-property rights.
Those fears combined with a persistent drop in crude-oil prices have made investors particularly on edge, fretting that global economic growth is imperiled.
What are market participants saying
“The jobs report threaded the needle really well,” J.J. Kinahan, chief market strategist with TD Ameritrade told MarketWatch, arguing that 150,000 new jobs is neither to high nor too low for investors.
“Had the this come in really hot, the market would have interpreted it as a number that would force the Fed to raise rates not just in December, but in March too,” he said. “You also didn’t want to miss in a huge way on the down side, as it would have shaken faith in the economy,” he said.
Which stocks are in focus?
Shares of Big Lots Inc. BIG, -17.17% are trading down more than 18% before the bell Friday, after wider-than-expected third-quarter loss.
Shares of Broadcom Inc. AVGO, +3.79% are in focus after the chip maker announced fiscal fourth-quarter profits and sales Thursday evening that topped Wall Street expectations. The stock is up 4.6% in premarket action Friday.
Shares of Altria Group MO, +1.82% are in focus after the company announced it would take a 45% ownership stake in the cannabis-firm Cronos Group Inc. CRON, +25.17% worth $1.8 billion. The stock is up 2.5% in premarket action, while Cronos shares are surging more than 43% on the news.
What other data and Fed speakers are ahead?
- Wholesale inventories for October are set to be released at 10 a.m.
- The consumer-sentiment index also is scheduled to be released at that time
- Federal Reserve Board Gov. is set to speak at 12:15 p.m.
- St. Louis Fed President James Bullard will talk at 1 p.m.
- A reading on consumer credit for October will be released at 3 p.m.
How are other markets trading?
Asian markets traded mostly higher Friday, with the Nikkei 225 NIK, +0.82% rising 0.8% and markets in South Korea SEU, +0.34% and Australia XJO, +0.42% advancing on the day. The Shanghai Composite Index SHCOMP, +0.03% was virtually flat, with gains of less than 0.1%.