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U.S. Stocks May Move Back To The Upside In Early Trading

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April 05 2024 9:10AM

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to regain ground following the sell-off seen late in the previous session.

Traders may look to pick up stocks at relatively reduced levels following the steep drop seen during Thursday’s session, which dragged the Dow down to its lowest closing level in a month.

The futures have seen further upside following the release of a report from the Labor Department showing much stronger than expected job growth in the month of March.

The Labor Department said non-farm payroll employment spiked by 303,000 jobs in March after surging by a downwardly revised 270,000 jobs in February.

Economists had expected employment to jump by 200,000 jobs compared to the addition of 275,000 jobs originally reported for the previous month.

The report also said the unemployment rate edged down to 3.8 percent in March from 3.9 percent in February, while economists had expected the unemployment rate to come in unchanged.

While the stronger than expected job growth may add to recent concerns about the outlook for interest rates, the report also showed a continued slowdown in the annual rate of wage growth.

The Labor Department said the annual rate of wage growth slowed to 4.1 percent in March from 4.3 percent in February, in line with estimates.

Stocks turned in a strong performance throughout much of the trading day on Thursday but came under substantial pressure in the latter part of the session. The major averages plummeted in the final two hours of trading, ending the day sharply lower.

The major averages saw continued weakness going into the close, finishing the session nearly their worst levels of the day. The Nasdaq tumbled 228.38 points or 1.4 percent to 16,049.08, while the S&P 500 slumped 64.28 points or 1.2 percent to 5,147.21.

After surging nearly 300 points in early trading, the Dow plunged 530.16 points or 1.4 percent to 38,596.98, closing lower for the fourth straight session.

The late-day sell-off on Wall Street came amid a continued surge by the price of crude oil, which advanced for the fifth straight session and reached its highest levels since last October.

Crude for May delivery jumped $1.16 to $86.59 a barrel, raising concerns higher energy prices will keep inflation elevated and convince the Federal Reserve to hold off on lowering interest rates.

Negative sentiment was also generated in reaction to comments by Minneapolis Fed President Neel Kashkari, who suggested in an interview with Pensions & Investments that the central bank might not cut rates at all this year if inflation continues moving sideways.

Earlier in the session, stocks benefited from a positive reaction to a Labor Department report showing first-time claims for U.S. unemployment benefits rose by more than expected in the week ended March 30th.

The report said initial jobless claims climbed to 221,000, an increase of 9,000 from the previous week’s revised level of 212,000.

Economists had expected jobless claims to inch up to 214,000 from the 210,000 originally reported for the previous week.

With the bigger than expected increase, jobless claims reached their highest level since hitting 225,000 in the week ended January 27th.

The advance by jobless claims generated some optimism about the outlook for interest rates, although the likelihood of a rate cut in June remains uncertain.

Semiconductor stocks moved sharply lower over the course of the session, dragging the Philadelphia Semiconductor Index down by 3.0 percent.

Shares of AI darling Nvidia (NASDAQ:NVDA) plunged by 3.4 percent after jumping as much as 1.9 percent early in the trading day.

Considerable weakness also emerged among housing stocks, as reflected by the 1.6 percent loss posted by the Philadelphia Housing Sector Index.

Gold stocks also saw significant weakness as the price of the precious metal snapped a seven-session winning streak, with the NYSE Arca Gold Bugs Index falling by 1.6 percent.

Computer hardware, brokerage and healthcare stocks also came under pressure as the day progressed, moving lower along with most of the other major sectors.