Futures Rally on EU Hopes, Falling Unemployment Rate


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Stock-index futures held on to sizeable gains as data showing the unemployment rate fell to the lowest level since 2009, coupled with hopes that European leaders are taking measures to tackle the debt crisis boosted traders' sentiment.

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Today's Markets

As of 8:38 a.m. ET, Dow Jones Industrial Average futures rose 157 points to 12,160, S&P 500 futures gained 16.3 points to 1,260 and Nasdaq 100 futures gained 28.9 points to 2,339.

The Labor Department reported nonfarm payrolls rose by 120,000 in November, slightly less than the 122,000 economists had expected. The unemployment rate unexpectedly fell to 8.6% from 9%, hitting its lowest level since March 2009.

The private sector tacked on 140,000 jobs, while the government shed 20,000 in a trend that has been seen in recent reports. The unemployment rate is calculated by comparing the number of unemployed to those in the workforce.  In November, 315,000 individuals left the workforce, which was a factor in pushing the unemployment rate lower.

Treasury yields climbed to their highest level since October 31 on the report, and the euro modestly trimmed gains on the U.S. dollar.

The blue chips have added close to 800 points since Monday and are now more than 3% to the upside for the year.  Meanwhile, the broader S&P 500 and Nasdaq have trimmed their year-to-date losses to 1%.

French President Nicolas Sarkozy after the market closed on Thursday proposed tighter fiscal integration for euro zone countries, and for the creation of a European Monetary Fund, which would be able to aid ailing countries preemptively.  The proposed body would be able to make decisions based on a majority vote instead of a unanimous one, which would make the process of providing rescue aid much quicker. This move comes ahead of a summit next Friday in which market participants hope leaders will be able to reach a comprehensive solution on tackling the debt crisis.

The new head of the European Central Bank, Mario Draghi, also hinted on Thursday that the central bank may launch an action in European debt markets in exchange for countries taking stronger steps on reining in sovereign debt.  However, it is important to note that Draghi came short of actually proposing an explicit measures.

European blue chips jumped 1.9%, while the euro rose 0.2% to $1.349.

Energy markets were broadly to the upside.  The benchmark crude oil contract traded in New York jumped $1.01, or 1%, to $101.22 a barrel.  Wholesale RBOB gasoline soared 7 cents, or 2.8%, to $2.63 a gallon.

In metals, gold gained $17.00, or 0.98%, to $1,757 a troy ounce. U.S. Treasury yields continued rising as equity markets have rallied.  The benchmark 10-year note yields 2.128% from 2.003%.

Foreign Markets

European blue chips jumped 1.9%, the English FTSE 100 rallied 1.5% to 5,574 and the German DAX climbed 1.7% to 6,137.

In Asia, the Japanese Nikkei 225 edged higher by 0.54% to 8,644 and the Chinese Hang Seng rose 0.2% to 19,040.

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