U.S. Equity Futures Drop on March Payrolls Miss

U.S. stock futures declined after the monthly jobs report -- released during a holiday-shortened trading session for futures -- came in much weaker than expected.

The nonfarm payroll showed that the U.S. economy added 126,000 jobs in March, while unemployment rate stayed at 5.5%, while forecasts by economists polled by MarketWatch was for 243,000.

All major U.S. stock exchanges, including the New York Stock Exchange and Nasdaq, will be closed on Friday. London markets and major exchanges in Europe will be closed Monday and Friday. Regular U.S. trade reopens on Monday, April 6, but stock futures will trade until 9:15 a.m. Eastern Time.

After the release futures fell sharply. The S&P 500 futures (ESM5) were down 14.75 points, or 0.7% to 2,045, while those for the Dow Jones Industrial Average (YMM5) dropped 129 points, or 0.7%, to 17,544. Futures for the Nasdaq-100 (NQM5) lost 27 points, or 0.7%, to 4,279. Futures for most of the major averages had been near flat just ahead of the report.

"The jobs report reflects a general theme that the first quarter did not live up to expectations," said Carl Tannenbaum, chief economist for Northern Trust.

"The weakness stems from weather-related depression, as seen in soft construction job gains. The drastic correction that the energy industry is experiencing has also affected job gains there, as we saw declines in energy and mining," Tannenbaum noted.

Despite the holiday closing, the disappointing jobs report is likely to set the tone for trading in U.S. stock markets Monday.

"You're going to have plenty of opportunity to get a reaction--and it is probably going to be a truer reaction--in the market on Monday," said Art Hogan, chief market strategist at Wunderlich Securities, said Thursday.

The U.S. generated just 126,000 new jobs in March, marking the smallest gain since the end of 2013, while January and February gains were cut by a combined 69,000. The disappointment in the March number comes as a big surprise and is the first clear evidence that the labor market might be slowing down. The unemployment rate, meanwhile, was unchanged at 5.5%.

U.S. stocks closed out the Easter week with mostly modest gains on Thursday, leaving the S&P 500 (SPX) up 7.27 points, or 0.4% at 2,066.96 and up 0.3% for the week.