U.S. Stocks May See Initial Strength Following Jobs Data

Following the mixed performance seen in the previous session, stocks are likely to move to the upside in early trading on Friday. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.6 percent.

The futures saw further upside following the release of the Labor Department’s highly anticipated report on employment in the month of August.

While the report showed modestly stronger than expected job growth in August, the report also showed an unexpected increase in the unemployment rate.

The unexpected increase in the unemployment rate is likely to add to investor optimism about the Federal Reserve refraining from further interest rate hikes.

The Labor Department said employment climbed by 187,000 jobs in August compared to economist estimates for the addition of 170,000 jobs.

Meanwhile, the report also showed notable downward revisions to pace of job growth in the two previous months.

Revised data showed employment rose by 105,000 jobs in June and by 157,000 jobs in July, reflecting a combined downward revision of 110,000 jobs.

The Labor Department also said the unemployment rate climbed to 3.8 percent in August from 3.5 percent in July. Economists had expected the unemployment rate to remain unchanged.

Shortly after the start of trading, the Institute for Supply Management is due to release its report on manufacturing activity in the month of August.

The ISM’s manufacturing PMI is expected to inch up to 47.0 in August from 46.4 in July, although a reading below 50 would still indicate a contraction.

The Commerce Department is also due to release its report on construction spending in the month of July. Construction spending is expected to increase by 0.5 percent.

After failing to sustain an early move to the upside, stocks gave back ground over the course of the trading session on Thursday. The major averages pulled back well off their highs of the session, with the Dow and the S&P 500 ending the day in negative territory.

The Dow jumped by nearly 180 points in early trading but ended the day down 168.33 points or 0.5 percent at 34,721.91. The S&P 500 also slipped 7.21 points or 0.2 percent to 4,507.66, while the Nasdaq inched up 15.66 points or 0.1 percent to 14,034.97 closing higher for the fifth straight session.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher, with trading Hong Kong suspended due to Typhoon Saola. Japan’s Nikkei 225 Index rose by 0.3 percent, while China’s Shanghai Composite Index climbed by 0.4 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the German DAX Index is down by 0.2 percent, the French CAC 40 Index is up by 0.1 percent and the U.K.’s FTSE 100 Index is up by 0.5 percent.

In commodities trading, crude oil futures are advancing $0.81 to $84.44 a barrel after surging $2 to $83.63 a barrel on Thursday. Meanwhile, after slipping $7.10 to $1,965.90 an ounce in the previous session, gold futures are climbing $11.90 to $1,977.80 an ounce.

On the currency front, the U.S. dollar is trading at 144.67 yen versus the 145.54 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0856 compared to yesterday’s $1.0843.

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