Futures Point to Higher Open, Traders Await Monthly Jobs Data
Wall Street was setting up for opening gains Friday, as investors waited on data expected to show the biggest annual gain in new jobs since the recession ended, while numbers out of China showed a marked decrease in exports from the prior month.
Shares of Alcoa Inc. could be in the spotlight after the aluminum producer unofficially kicked off the reporting season after the bell Thursday, with numbers that fell short of expectations.
Futures for the Dow Jones Industrial Average rose 33 points to 16,424, while S&P 500 index futures gained 4.7 points to 1,837.70. Futures for the Nasdaq-100 rose 13 points to 3,560.75.
The indicator traders worldwide are waiting for--December nonfarm payrolls--will be released at 8:30 a.m. EST. Economists polled by MarketWatch in December predicted a net increase of 193,000 in jobs and an unemployment rate that sticks to 7%.
But Wednesday's private-sector payrolls data, which came in better than expected, raised expectations and some analysts are looking for a much bigger number, said Fawad Razaqzada, technical analyst at Forex.com.
Razaqzada said the first few days of 2014 have been marked by rising European stocks--up again Friday--and a muted performance for Wall Street, which he noted could mean the "so-called 'smart money' may have already started crossing the Atlantic." The Stoxx 600 index is set to gain 0.9% this week, while the S&P 500 is looking at a gain so far of 0.4%.
The S&P 500 managed a fractional gain Thursday, but the Dow industrials and Nasdaq Composite dropped as shares of big telecom companies fell.
"However, that's not to say the Dow will start heading lower from here; it may do, but the trend is still defiantly bullish, and we haven't seen any obvious reversal patterns unfold yet," Razaqzada said in a note. "What's more, the Fed has made it clear that interest rates may be kept at their current low levels 'well past' the time when the unemployment rate declines below the 6.5% threshold."
He said any Dow retreat from here would represent a "healthy correction," with a pullback toward the support trendline of around 16,030 possible. Below that is the support level of 16,175, but to get to either of these two levels, he said 16,400 will have to be broken on a daily basis. That could happen Friday, Razaqzada said.
Overseas, Europe stocks were trucking higher. In Asia, stocks in Shanghai ended the day lower after data showed Chinese exports grew 4.3% on the year in December, slower than the 4.5% expected by economists. The dollar rose, largely against the British pound after U.K. industrial output data came in flat. Oil prices rose and gold edged up.
Among corporates, shares of Alcoa could come under pressure after an nearly 4% fall in late trading Thursday, as quarterly earnings fell short of expectations.
Shares of Sears Holdings Corp. could follow up a 14% drop in late trading, after the retailer reported weak holiday sales and a quarterly forecast well below Wall Street expectations.
On the upside, shares of Abercrombie & Fitch Co. could gain after a nearly 14% late jump after the youth-geared apparel retailer raised its outlook for the year.