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U.S. stock-index futures traded lower early Friday as Wall Street awaits the employment report for July, which could help cement or deflate growing bullishness in equity markets.
Rising tensions between Beijing and Washington, after an executive order banning transactions with a pair of China-based technology companies, however, have been blamed for some of the retreat in markets early Friday.
How are equity benchmarks trading?
Futures for the Dow Jones Industrial Average YM00, -0.46% YMU20, -0.46% were 112 points, or 0.4%, lower at 27,173; those for the S&P 500 index ES00, -0.40% ESU20, -0.40% were trading 13.05 points, or 0.4%, at 3,331.25; while Nasdaq-100 futures NQ00, -0.38% NQU20, -0.38% retreat 47.25 points, or 0.4%, at 11,214.
On Thursday, the Dow DJIA, +0.68% rose 185.46 points, or 0.7%, to end at 27,386.98; the S&P 500 SPX, +0.64% climbed 21.39 points, or 0.6%, to close at 3,349.16. Both benchmarks booked five straight days of gains, with the Dow ending 7.3% from its all-time closing high set on Feb. 12, while the S&P closed 1.1% from its Feb. 19 closing record. The Nasdaq Composite Index COMP, +0.99% gained 109.67 points, or 1%, finishing at 11,108.07 to book its 32nd record close of the year.
What’s driving the market
After a good week for U.S. stocks, and in particular the Nasdaq Composite, market participants are watching for what could arguably be one of the most important monthly jobs reports since the pandemic began in March, with analysts uncertain about the state of the labor market as coronavirus cases accelerated last month in many states, including Florida, California, Arizona and Texas.
Consensus estimates from economists polled by MarketWatch point to an increase of 1.7 million jobs in July—just one-third of the unexpected 4.8 million gain in June. The range of estimates in the MarketWatch survey run from a decline of 280,000 to an increase as high as 4 million, MarketWatch’s Jeff Bartash writes. On top of that, a report on initial jobless claims fell by 249,000 in early August to 1.19 million, touching the lowest level since the coronavirus pandemic began about five months ago and raising more questions about Friday’s results after private-sector jobs figures showed that 167,000 jobs were added last month, compared with forecast of 1.9 million.
Michael Hewson, chief market analyst at CMC Markets, said that “these job gains won’t reflect the events of the last two weeks, where we’ve seen a host of US states re-impose lockdown measures,” as coronavirus infections have climbed.
The global tally for confirmed cases of the coronavirus that causes COVID-19 climbed above 19 million on Friday, according to data aggregated by Johns Hopkins University, and the death toll rose to 715,163. The U.S. case tally climbed to 4.9 million and the death toll rose above 160,000, after the U.S. added another 1,000 deaths overnight and counted another 57,000 new cases.
Friday’s nonfarm-payrolls report, due at 8:30 a.m. Eastern Time, comes as lawmakers in Washington have been haggling over possibly trillions of dollars in aid for out-of-work Americans after a $600 a week unemployment relief benefits expired last month. Republican Senate Majority Leader Mitch McConnell told CNBC on Thursday that friction between GOP and Democrats centered on the amount of additional aid to provide.
President Donald Trump on Thursday told reporters that he could sign an executive order to provide fresh aid to the jobless but it appears presidential powers are limited in what if any action can be taken to provide fresh funds without Congressional approval.
Still, the steady climb for stocks suggests that investors are betting that an additional round of aid will be forthcoming at some point.
Meanwhile, President Donald Trump signed an executive orders late Thursday that bars transactions with the parent companies of Chinese social media companies TikTok and Tencent TCEHY, +0.16%, as the president attempts to force an acquisition by mid September of TikTok’s U.S. arm in the coming 45 days. In response, TikTok, which is owned by China-based ByteDance, has threatened to sue the president, reflecting rising Sino-American tensions.
Read: July jobs report could be ‘nail in the coffin’ for higher rates
In other economic reports, investors will watch for a read of wholesale trade at 10 a.m. and a report on consumer credit at 3 p.m.
How did other markets trade?
The 10-year Treasury note yield TMUBMUSD10Y, 0.531% was little changed at 0.535%. Bond prices move inversely to yields.
The greenback was nearly unchanged, with the ICE U.S. Dollar index DXY, +0.43% gained 0.4% at 93.171.
In Europe, the Stoxx Europe 600 index SXXP, -0.02% traded flat, and the FTSE 100 UKX, -0.25% rose less than 0.1%.
In Asia, China’s CSI 300 index 000300, -1.15% ended trade off 1.2%, while Japan’s benchmark Nikkei NIK, -0.39% closed 0.4% lower. Hong Kong’s Hang Seng Index HSI, -1.60% closed off 1.6%.
U.S. benchmark CL.1, -1.26% oil headed down 1.1% to trade at $41.51 a barrel on the New York Mercantile Exchange. Gold futures for December GCZ20, -0.29% aimed for a sixth consecutive day of gains but were most recently seeing muted trade at $2,069.30 an ounce, down less than 0.1%.
