Dow futures head lower after weaker-than-expected September jobs report

view original post

The U.S. stock market looked set to wobble on Friday after a monthly report on the labor market came in much weaker than expected, raising some questions about the path forward for the Federal Reserve that had looked poised to reduce its bond purchases as the economy recovers from the pandemic.

How are stock-index futures trading?
  • Dow Jones Industrial Average futures YM00, -0.21% were down 23 points, or less than 0.1%, at 34,609.
  • S&P 500 futures ES00, -0.10% were up 5 points at 4,395.
  • Nasdaq-100 futures ES00, -0.10% were up 74 points, or 0.5%, at 14,963.

On Thursday, the Dow Jones Industrial Average DJIA, +0.17% rose 338 points, or 0.98%, to 34755, the S&P 500 SPX, +0.17% increased 36 points, or 0.83%, to 4400, and the Nasdaq Composite COMP, +0.03% gained 152 points, or 1.05%, to 14654.

What’s driving the market?

Investors are digesting data that showed the U.S. economy created far fewer jobs than had been expected in September. The question now is whether employment gains are sufficient to keep the Federal Reserve on track to scale back monetary policy stimulus.

Nonfarm payrolls rose by just 194,000 in the month, compared to the Dow Jones estimate of 500,000, the Labor Department reported Friday. However, the unemployment rate fell to 4.8%, versus expectations for 5.1%.

The spread this summer of coronavirus delta variant likely discouraged job seekers in September, despite many companies being desperate to hire, economists and business leaders say.

The labor market remains depleted from last year’s recession and job growth was stronger earlier this year. In the first seven months of 2021, the economy added an average 636,000 jobs a month.

Meanwhile, Washington avoided an unprecedented federal default after the Senate voted late Thursday to raise the government’s debt ceiling into December. The reprieve is temporary as lawmakers must head back to the bargaining table before the end of the year.

Optimism around a deal was enough to rally stocks, but that faded by Friday as investors took to the sidelines ahead of September payrolls data.

How are other assets trading?
  • The U.S. oil benchmark  CL00, +1.61% BRNX21 was up 1% to $79.11 a barrel, and headed for its seventh-straight weekly gain, with the contract up 4% for the week. Gold futures  GC00, +0.82%  were up modestly at $1,759.80 an ounce.
  • The ICE U.S. Dollar Index  DXY, -0.10%,  a measure of the currency against a basket of six major rivals, was flat.
  • In European equities trade, the Stoxx Europe 600  SXXP, -0.17% fell 0.3% and London’s FTSE 100 UKX, -0.03% was flat.
  • China’s CSI 300 index 000300, +1.31% rose 1.3% as markets returned from a multiday holiday. Japan’s Nikkei 225  NIK, +1.34% gained 1.3%.