Wages are key part of U.S. jobs report, analysts say
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U.S. stocks were poised for another record-setting session on Friday, as Dow futures breezed further past the 25,000 milestone in a global stock rally that analysts said is showing no signs of tapering off soon.
Traders were focused on the closely watched nonfarm payrolls report due later in the session, which will be watched for any clues as to whether U.S. wages are picking up.
What are stock futures doing?
Futures for the Dow Jones Industrial Average rose 61 points, or 0.2% to 25,114, while those for the S&P 500 index climbed 5.70 points, or 0.2%, to 2,729.50. Futures for the Nasdaq-100 index gained 15.75 points, or 0.2%, to 6,619.25.
All three benchmarks scored record closing highs on Thursday (http://www.marketwatch.com/story/dow-on-track-for-25000-milestone-as-global-stock-rally-stays-strong-2018-01-04), with the Dow average ending above the 25,000 handle for the first time ever after logging a 0.6% gain. The S&P 500 rose 0.4%, and the Nasdaq Composite Index closed 0.2% higher.
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The S&P has now closed at a record on the first three trading days of the new year, the first time it has done so since 1964 (http://www.marketwatch.com/story/the-sp-500-is-poised-to-do-something-it-hasnt-done-since-1964-2018-01-04), according to The Wall Street Journal Market Data Group.
What's driving the market?
The positive trading mood that has driven global stock markets higher in 2017 and early 2018 continued on Friday. Analysts said the upbeat sentiment is buoyed by the recently passed tax package in the U.S., rising commodity prices and robust corporate earnings. Solid economic data and low bond yields have also been cited as contributing factors.
What economic data are coming up?
On Friday, traders were hoping for the arrival of more upbeat economic data to keep the rally alive. The top-tier monthly jobs report is out at 8:30 a.m. Eastern Time, and investors are particularly looking for a read on the strength of wages as a gauge of inflation.
The minutes from the December Federal Reserve meeting showed policy makers were relatively upbeat on the outlook for the U.S. economy, but still worried about the persistently low inflation levels.
That means the wage growth data out on Friday could take on more significance than usual, as it could encourage a more hawkish stance at the Fed, analysts said.
Read:Lack of wage growth will likely dampen celebration of December jobs report (http://www.marketwatch.com/story/lack-of-wage-growth-will-likely-dampen-celebration-of-strong-december-jobs-report-2018-01-04)
Economists polled by MarketWatch forecast that wages grew 0.3% in December, up from 0.2% in November. Nonfarm payrolls are expected to have risen by 195,000, down slightly from the 228,000 seen in November. The unemployment rate is forecast to remain at 4.1%.
The dollar was higher ahead of the data, with the ICE dollar index up 0.2% at 92.051.
In other economic news on Friday, figures for the foreign trade deficit for November are due for release at 8:30 a.m. Eastern. The ISM nonmanufacturing report for December and an update on factory orders for November are scheduled for 10 a.m. Eastern.
Among Fed speakers, Philadelphia Fed President Patrick Harker is slated to give a speech on the economic outlook at the American Economic Association at 10:15 a.m. Eastern in Philadelphia.
In the same city, Cleveland Fed President Loretta Mester is expected to speak on a panel about "coordinating conventional and unconventional monetary policy for macroeconomic stability" at 12:30 p.m. Eastern.
What are strategists saying?
"Another strong bullish move on the Dow has taken the market clear into all-time high territory once more. The start to 2018 has been extremely positive, and the strength of the momentum suggests there is little reason not to back further gains," said Richard Perry, market analyst at Hantec Markets.
"Very little regard has been given to the key psychological 25,000 barrier, with the market breezing straight through yesterday. The bulls are now well-positioned moving into nonfarm payrolls," Perry said in a note.
"Earnings are key at the moment as this global recovery/expansion has everything apart from wage growth/inflation which in turn is keeping the Fed rate hikes gradual and volatility low. [Deutsche Bank] has put out a fair amount of research over the last few weeks detailing how U.S. wage growth is picking up so it'll be interesting to see whether this can find its way into the main headline data soon," said Jim Reid, macro strategist at Deutsche Bank, in a note.
Which stocks are in focus?
Apple Inc.(AAPL) shares were marginally lower in Friday's premarket trade. The technology published information late Thursday that confirmed that all devices (http://www.marketwatch.com/story/apple-admits-its-devices-are-affected-by-meltdown-and-spectre-chip-bugs-2018-01-04) running its mobile and personal-computer operating systems are affected by two massive computer chip vulnerabilities (http://www.marketwatch.com/story/meltdown-and-spectre-are-huge-vulnerabilities-for-intel-and-more-what-you-need-to-know-2018-01-03).
Spirits and beer company Constellation Brands Inc.(STZ) is slated to report earnings ahead of the bell.
What are other markets doing?
Asian stock markets continued to power higher (http://www.marketwatch.com/story/asian-markets-continue-soaring-to-new-highs-but-show-signs-of-cooling-2018-01-04), with Japan's Nikkei 225 index ending at a 26-year high.
It was a similar story in Europe (http://www.marketwatch.com/story/european-stocks-rise-for-3rd-day-as-global-rally-stays-strong-2018-01-05), where the Stoxx Europe 600 index rose 0.6%.
Oil prices dropped 0.8% to $61.52 a barrel, while gold slipped 0.2% to $1,318.60 an ounce.
In cryptocurrencies, bitcoin futures jumped 7% to $15,935. Bitcoin itself rose 4.5% to $15,837.83 on Coindesk.com, while Ripple coins fell 6.9% to $3.34, according to CoinMarketcap.com. Ripple coins started to tumble Thursday night after Coinbase said it's not adding the currency to its exchange at this point.
(END) Dow Jones Newswires
January 05, 2018 06:22 ET (11:22 GMT)