The minute of the Friday market
- Global stocks are down ahead of today’s May non-farm payroll report as inflation signals pick up speed and pressure on the Fed’s ‘transitory’ narrative continues to mount.
- American employers likely added 650,000 net new jobs to the economy last month, analysts estimate, with wages rising 0.2% and an overall unemployment rate falling to 5.9%.
- Yields on benchmark 10-year notes are up 1.63%, while the dollar index gains 0.1% to trade at 90.565 ahead of today’s non-farm payroll data.
- CDC data shows that 136.6 million Americans have been fully vaccinated against the coronavirus, with about 297.7 million doses administered as of Wednesday.
- US equity futures suggest a weaker open head from the May Nonfarm Payroll report at 8:30 am ET and a speech on the central bank’s role in green investing from Fed Chairman Jerome Powell. at 7:00 am ET.
Wall Street futures rose on Friday, as the dollar gave way and Treasury bond yields fell lower, following a modestly weaker-than-expected reading of the Labor Department’s May nonfarm payroll report.
The Bureau of Labor Statistics said 559,000 new jobs were created last month, led by gains in leisure and hospitality, with the unemployment rate rising in the headlines that fell to 5.8% from a 6.1%, while wages were up 2% from last year, exacerbating forecasts and underscoring the challenge employers face in bringing workers back to market during the final months of the pandemic.
Data from payroll processing group ADP showed that private employers added 978,000 new jobs much larger than expected last month, while new claims for unemployment benefits fell to a new post-pandemic low of 385,000 for the week ending May 22.
Investors will also keep a close eye on rising hourly wages amid concerns that a record 8.1 million job openings have forced employers to pay higher and higher wages to fill job vacancies.
That dynamic, as well as a string of data releases from both the manufacturing and services sectors of the economy showing input costs rising at the fastest rate in decades, has worried investors that headline inflation, which is currently is 4.2%, accelerate further in the future. summer months.
The direction of oil prices certainly adds to that theory, with WTI crude rising more than 4% this week to a 2018 high of $ 69.20 a barrel in overnight trading, bringing its annual profit to more than 30%. , as operators see. higher demand from the world’s major economies during the second half of the year.
Still, even with a plethora of figures cementing the case for short-term inflation spikes, benchmark 10-year Treasury yields, a key metric for stock market direction, have remained close. off the 1.6% mark for much of the week.
Stock futures rose after the data was released, and contracts pegged to the Dow Jones industrial average indicated a 105-point opening bell gain after previously suggesting a 20-point retracement.
Contracts tied to the S&P 5500, which has risen 12% during the year, are priced at 17 points, while the Nasdaq is up 70 points.
Early pre-market engines include Tesla (TSLA) – Get report, which gained just over 1% to change hands at $ 579.00 apiece following last night’s report of a sharp drop in vehicle sales in China, and Ford Motor Co. (F) – Get report, which extended its recent rally by another 3% to $ 16,150 per share, the highest in more than six years, following yesterday’s first-half bullish outlook from rival General Motors. (GM) – Get report and a target price increase to $ 18 from JPMorgan.
Lululemon (LULU) – Get report The stock was also active, but fell 0.4% even after the sportswear company posted stronger-than-expected first-quarter earnings and forecast full-year earnings firmly ahead of Wall Street forecasts. .
In other markets, European stocks changed shortly before US employment data, while stocks in Asia fell lower, led by a 0.4% drop for the Nikkei 225 in Tokyo amid new questions about the fate of the delayed Summer Olympics.