Futures Turn Positive Following Monthly Jobs Report

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to extend the strong upward move seen over the two previous sessions.

The futures turned positive following the release of the Labor Department’s closely watched report on employment in the month of February.

While job growth in February came in much stronger than expected, the report also showed notable downward revisions to job growth in the two previous months.

The Labor Department said non-farm payroll employment surged by 275,000 jobs in February, while economists had expected employment to jump by 200,000 jobs.

However, the report also said job growth in December and January was downwardly revised to 290,000 and 229,000 jobs, respectively, reflecting a net downward revision of 167,000 jobs.

The Labor Department also said the unemployment rate rose to 3.9 percent in February from 3.7 percent in January. Economists had expected the unemployment rate to come in unchanged.

The downward revisions to job growth in the two previous months combined with the increase in the unemployment rate may add to recent optimism about the outlook for interest rates.

Treasury yields initially jumped following the release of the report but have since moved lower, extending a recent downward trend.

Extending the rebound seen during Wednesday’s session, stocks moved sharply higher during trading on Thursday. The major averages further offset the notable pullback seen to start the week, with the Nasdaq and the S&P 500 bouncing back to record intraday highs.

The tech-heavy Nasdaq surged 241.83 points or 1.5 percent to 16,273.38, ending the day just shy of last Friday’s record closing high, while the S&P 500 managed to set a new record closing high, jumping 52.60 points or 1.0 percent to 5,157.36. The narrower Dow posted a more modest gain, rising 130.30 points or 0.3 percent to 38,791.35.

The extended rebound on Wall Street came as optimism about the outlook for interest rates continued to inspire traders to get back into the markets following the pullback seen on Monday and Tuesday.

After saying rate cuts were likely this year during Congressional testimony on Wednesday, Federal Reserve Chair Jerome Powell doubled-down during remarks today, saying cuts “can and will” begin this year.

While Powell also reiterated officials needs “greater confidence” inflation is slowing, traders remain optimistic the Fed will begin cutting rates in June.

Adding to the optimism about interest rates, the European Central Bank lowered its annual inflation forecast while announcing its widely expected decision to leave rates unchanged.

Potentially adding to the buying interest on Wall Street, treasury yields saw further downside on the day, with the ten-year yield falling to its lowest closing level in a month.

Semiconductor stocks led the way higher, with the Philadelphia Semiconductor Index soaring by 3.4 percent to a record closing high.

Shares of Nvidia (NASDAQ:NVDA) shot up by 4.5 percent after Mizuho Securities raised its price target on the AI darling to $1,000 per share, while Micron (NASDAQ:MU) surged by 3.6 percent after Stifel upgraded its rating on the chipmaker’s stock to Buy from Hold.

Considerable strength was also visible among oil service stocks, as reflected by the 1.9 percent jump by the Philadelphia Oil Service Index. The strength in the sector came despite a modest decrease by the price of crude oil.

Housing stocks also showed a strong move to the upside, driving the Philadelphia Housing Sector Index up by 1.6 percent to a record closing high.

Software, gold and retail stocks also saw notable strength on the day, while networking stocks were among the few groups to buck the uptrend.

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