Stock Futures Hold Gains Despite Grim Job Data

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U.S. stock-index futures held on to mild gains despite a considerably weaker-than-expected report on the American labor market.

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Today's Markets

As of 8:40 a.m. ET, Dow Jones Industrial Average futures rose 14 points to 13288, S&P 500 futures climbed 2.8 points to 1434 and Nasdaq 100 futures gained 1 point to 2826.

The American economy added 96,000 jobs in August, fewer than the 125,000 Wall Street anticipated. The job gains from June and July also received downward revisions in the order of 20,000.

The unemployment rate fell to 8.1% from 8.3% in July. However, the labor force participation rate, which is a gauge of individuals that are employed or actively seeking employment, dropped to the lowest level since September 1981. That means part of the reason the unemployment rate fell was because people, employed and unemployed, actually left the labor force, according to Dan Greenhaus, chief global strategist at BTIG.

Digging into the data, the private sector tacked on 103,000 jobs, while the government shed 7,000. Average hourly earnings were unchanged at $23.52.

Economists broadly pointed to the report as weak overall, but said it increased the chances the Federal Reserve will take action to boost economic growth. The central bank is already in the process of lengthening the maturity of its balance sheet, but not its size, through a program dubbed "Operation Twist." However, some Fed watchers are looking for the central bank to buy assets outright in a third quantitative easing program.

"Another disappointing month of U.S. employment growth raises the prospect of further action from the Fed, meaning next Thursday's FOMC decision looks set to be a close call," Chris Williamson, chief economist at financial-data firm Markit wrote in an email.

IHS Global Insight Chief Economist Nigel Gault reckons that while the economy is on a "modest growth track," the situation has darkened some.

"Some of the drivers that were previously supporting growth ... are showing signs of flagging in the face of global economic headwinds and domestic policy uncertainty," he wrote in a research note.

Wall Street at Multi-Year Highs

The major market averages had their best day since late June on Thursday. The broad S&P 500 ended at its highest mark since May 2008, while the Dow notched its highest close since December 2007.

Market participants cheered a bond-buying plan crafted by the European Central Bank aimed at tackling the embattled eurozone's debt crisis. Borrowing costs among countries such as Spain and Italy, which were seen as particularly vulnerable to the crisis, have pulled back sharply over the past two sessions. Indeed, the yield on Spain's 10-year bonds fell below the 6% level for the first time since May. The yield fluctuated in the realm of 7.5% just a month ago.

In corporate news, chipmaker Intel (NASDAQ:INTC) slashed its third-quarter revenue guidance to a range of $12.9 billion to $13.5 billion from $13.8 billion to $14.8 billion. Pandora (NASDAQ:P) shares plunged more than 10% on a report from the Wall Street Journal that technology heavyweight Apple (NASDAQ:AAPL) is working on a rival custom-radio service.

Elsewhere, crude oil futures were in the green. The benchmark contract traded in New York climbed 60 cents, or 0.63%, to $96.13 a barrel. Wholesale New York Harbor gasoline jumped 0.95% to $3.02 a gallon.

In metals, gold dipped $7.70, or 0.45%, to $1,698.

Foreign Markets

The Euro Stoxx 50 rallied 1.4% to 2560, the English FTSE 100 edged up by 0.32% to 5796 and the German DAX jumped 0.99% to 7239.

In Asia, the Japanese Nikkei 225 soared 2.2% to 8872 and the Chinese Hang Seng surged 3.1% to 19802.