Oil companies fall as crude slides again; silver suffers flash crash
U.S. stock futures jumped on Friday after a report on employment showed that the U.S. gained 222,000 jobs in June, representing the largest job haul of the year and underscoring that the labor market remains healthy.
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The Labor Department said unemployment ticked up to 4.4% from 4.3% (http://www.marketwatch.com/story/us-adds-222000-jobs-in-june-as-hiring-surges-2017-07-07). Economists polled by MarketWatch had forecast a gain of 180,000 and unemployment to hold at 4.3%.
Futures for the Dow Jones Industrial Average gained 41 points, or 0.2%, at 21,320, while those for the S&P 500 index edged up 5.10 points, or 0.2%, at 2,413.50. Futures for the Nasdaq-100 index gained 22.50 points, or 0.4%, at 5,619.25.
The government report also indicated that readings for jobs in May and April were better than previously reported, perhaps, adding more support for the Federal Reserve to continue its plan to normalize monetary policy, lifting rates at least once more in 2017 and kicking off its $4.5 trillion balance-sheet reduction as early as September.
"[A headline reading of] 222,000 and a 16,000 upward revision to last month are a lot better than people were expecting," said Colin Cieszynski, chief market strategist at CMC Markets told MarketWatch. "Wages were slightly below expectations which has knocked down [the U.S. dollar] and boosted the Dow," he said.
Average hourly pay rose 0.2% to $26.25 an hour in June, below expectations for a 0.3% gain. Although wages have climbed a modest 2.5% in the past 12 months, pay is still below the usual gains at this point in the cycle of expansion.
Cieszynski said, despite lackluster wage growth, which is viewed as a proxy a for stubbornly low inflation, he viewed the climb in wages as strong and unlikely to change the Federal Reserve's monetary policy trajectory, as it looks to lift interest rates at least once more in 2017 and unwind its $4.5 trillion asset portfolio, which can also serve to tighten policy.
The swing higher in futures following the upbeat labor-market reading, comes after the Nasdaq Composite Index fell the most in Thursday's trade (http://www.marketwatch.com/story/us-stock-futures-pull-lower-as-investors-keep-searching-for-cues-2017-07-06), ending 1% lower as investors continued to rotate out of battered technology names. The S&P 500 index and Dow average fell 0.9% and 0.7%, respectively, as bonds dropped sharply, sending yields higher.
"The rising yields are a reaction to the shift in emphasis from central banks away from their long held view that advocates ultraloose monetary policy. However, can the data back this up?," said Richard Perry, market analyst at Hantec Markets, in a note.
"Today's U.S. employment situation report is crucial. Last month's nonfarm payrolls were a disappointment on headline jobs, but also average hourly earnings. Can this change this month? Markets tend to be cautious ahead of payrolls, with traders mindful of the potential volatility in response to the announcement," he added.
The yield on 10-year U.S. Treasury notes rose 1 basis point on Friday to 2.378%, around its highest in eight weeks.
Read:U.S. forecast to add 180,000 jobs in June, but don't be surprised if hiring falls short (http://www.marketwatch.com/story/us-forecast-to-add-180000-jobs-in-june-but-dont-be-surprised-if-hiring-falls-short-2017-07-06)
The greenback was slightly higher ahead of the report (http://www.marketwatch.com/story/dollar-rebounds-after-taper-tantrum-with-us-jobs-in-view-2017-07-07), with the ICE Dollar Index up 0.2% at 95.995.
Economic data: The Fed will release its semiannual monetary policy report to Congress at 11 a.m. Eastern.
Another potentially significant event for markets on Friday, is the two-day G-20 leaders' gathering in Hamburg, Germany. President Donald Trump will meet with Russian counterpart Vladimir Putin for the first time since taking office, as well as Chinese President Xi Jinping.
"Watching how host Angela Merkel balances the demands of President Trump, especially after the speech he gave [in Warsaw] (http://www.marketwatch.com/story/trump-puts-to-rest-article-5-doubt-in-warsaw-speech-2017-07-06), and of President Putin, and of President Xi is likely to prove more compelling viewing for markets than the average summit--especially given the background of central banks suddenly pulling the carpet out from under them all," said Michael Every, senior strategist at Rabobank, in a note.
As the leaders arrived on Thursday, police clashed with thousands of protesters (http://www.marketwatch.com/story/welcome-to-hell-protestors-police-clash-at-g-20-summit-2017-07-07) as around 12,000 people joined in a protest dubbed "Welcome to hell."
Oil blues: In a volatile week for oil prices, crude oil slumped 3% on ongoing concerns (http://www.marketwatch.com/story/oil-prices-drop-1-volatile-session-2017-07-07) that production cuts led by the Organization of the Petroleum Exporting Countries aren't enough to balance the oil market.
Read:OPEC can't save oil market alone--the U.S. has to step in, says Morgan Stanley (http://www.marketwatch.com/story/opec-cant-save-oil-market-alonethe-us-has-to-step-in-says-morgan-stanley-2017-07-06)
Oil-related companies fell in premarket action on Friday. Shares of Transocean Ltd. (RIG) were down 1.7%, Apache Corp.(APA) lost 0.6% and Noble Energy Inc.(NBL) dropped 0.6%.
Stock movers: Shares of Qualcomm Inc.(QCOM) were down 0.6% ahead of the bell. The company on Thursday filed a complaint against Apple Inc (http://www.marketwatch.com/story/qualcomm-steps-up-fight-against-apple-2017-07-06-164853632).(AAPL), saying the tech giant infringed several of Qualcomm's patents on wireless technology in iPhones and iPads.
Apple shares were off 0.1% premarket.
Shares of Campbell Soup Co.(CPB) could also be active after the company late Thursday said it plans to buy organic soup company Pacific Foods for $700 million (http://www.marketwatch.com/story/campbell-soup-to-acquire-pacific-foods-for-700-million-2017-07-06).
Synchronoss Technologies Inc.(SNCR) rallied 13% ahead of the bell after its board late Thursday said it would explore strategic alternatives, including a sale of the wireless-software company.
Other markets: Stocks in Asia closed mostly lower (http://www.marketwatch.com/story/asia-pacific-markets-slump-following-losses-in-us-europe-2017-07-06), while European stocks continued lower (http://www.marketwatch.com/story/european-stocks-fall-on-stumble-in-oil-prices-central-bank-concerns-2017-07-07).
Bond yields in Europe were relatively stable, with borrowing costs on German paper marginally lower at 0.565%.
Silver was down 0.9%, at $15.84 an ounce. The metal earlier in the session tanked almost 10% to $14.34 in a flash crash (http://www.marketwatch.com/story/silver-futures-sink-10-rebound-in-flash-crash-2017-07-07) that likely was due to a trading error. Gold traded 0.2% lower at $1,221.40 an ounce.
(END) Dow Jones Newswires
July 07, 2017 09:07 ET (13:07 GMT)