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U.S. stock-index futures pared declines early Friday after the July employment report showed the economy added back slightly more jobs than expected, but at a slower pace than in previous months with the American recovery slowed by rising coronavirus cases in many states.
Rising tensions between Beijing and Washington, after an executive order banning transactions with a pair of China-based technology companies, may provide some grounds for caution.
How are equity benchmarks trading?
Futures for the Dow Jones Industrial Average YM00, -0.23% YMU20, -0.23% were 48 points, or 0.2%, lower at 27,232; those for the S&P 500 index ES00, -0.33% ESU20, -0.33% were trading 9.55 points, or 0.3%, at 3,335; while Nasdaq-100 futures NQ00, -0.37% NQU20, -0.37% retreat 39.25 points, or 0.4%, at 11,221.75.
On Thursday, the Dow DJIA, +0.68% rose 185.46 points, or 0.7%, to end at 27,386.98; the S&P 500 SPX, +0.64% climbed 21.39 points, or 0.6%, to close at 3,349.16. Both benchmarks booked five straight days of gains, with the Dow ending 7.3% from its all-time closing high set on Feb. 12, while the S&P closed 1.1% from its Feb. 19 closing record. The Nasdaq Composite Index COMP, +0.99% gained 109.67 points, or 1%, finishing at 11,108.07 to book its 32nd record close of the year.
What’s driving the market
Bullish investors may have been offered some support for extending the upward trend for equities after the jobs report showed that the U.S. added 1.76 million jobs in July—just one-third of the unexpected 4.8 million gain last month—with the unemployment rate falling to 10.2% from 11.1% in June. Consensus estimates from economists polled by MarketWatch had been for an increase of 1.7 million jobs on the month.
Shawn Cruz, manager of trader strategy at TD Ameritrade, said that the report offered reason for investors to be upbeat and provides some indication that business reopening could result in a sharper bounceback in the labor market after millions of jobs were lost in the fallout from the COVID-19 pandemic.
“I think this could be good for the bulls. I think it shows that as we start to ease [ social-distancing restrictions] you will see a pretty solid bounce back in the labor force,” Cruz told MarketWatch in an interview after the results.
As of Friday morning, the global tally for confirmed cases of COVID-19 climbed above 19 million on Friday, according to data aggregated by Johns Hopkins University, and the death toll rose to 715,163. The U.S. case tally climbed to 4.9 million and the death toll rose above 160,000, after the U.S. added another 1,000 deaths overnight and counted another 57,000 new cases.
Friday’s nonfarm-payrolls report come as lawmakers in Washington have been haggling over possibly trillions of dollars in aid for out-of-work Americans after a $600 a week unemployment relief benefits expired last month.
President Donald Trump on Thursday told reporters that he could sign an executive order to provide fresh aid to the jobless but it appears presidential powers are limited in what if any action can be taken to provide fresh funds without Congressional approval.
Still, the steady climb for stocks suggests that investors are betting that an additional round of aid will be forthcoming at some point.
Meanwhile, President Donald Trump signed an executive orders late Thursday that bars transactions with the parent companies of Chinese social media companies TikTok and Tencent TCEHY, +0.16%, as the president attempts to force an acquisition by mid September of TikTok’s U.S. arm in the coming 45 days. In response, TikTok, which is owned by China-based ByteDance, has threatened to sue the president, reflecting rising Sino-American tensions.
Read: July jobs report could be ‘nail in the coffin’ for higher rates
In other economic reports, investors will watch for a read of wholesale trade at 10 a.m. and a report on consumer credit at 3 p.m.
How did other markets trade?
The 10-year Treasury note yield TMUBMUSD10Y, 0.536% was little changed at 0.535% after the jobs report. Bond prices move inversely to yields.
The greenback pared some of its gains after the nonfarm-payrolls data, with the ICE U.S. Dollar index DXY, +0.26% rising 0.3% at 93.016.
In Europe, the Stoxx Europe 600 index SXXP, +0.08% traded up less than 0.1, and the FTSE 100 UKX, -0.22% fell less than 0.1%.
In Asia, China’s CSI 300 index 000300, -1.15% ended trade off 1.2%, while Japan’s benchmark Nikkei NIK, -0.39% closed 0.4% lower. Hong Kong’s Hang Seng Index HSI, -1.60% closed off 1.6%.
U.S. benchmark CL.1, -0.28% oil headed down 1.1% to trade at $41.51 a barrel on the New York Mercantile Exchange. Gold futures for December GCZ20, +0.15% aimed for a sixth consecutive day of gains and were up $4.70, or 0.3%, at $2,074.10 an ounce, down less than 0.1%.
