Stock Futures Cling to Gains After Disappointing Jobs Report
By Anna Hirtenstein
U.S. stock futures clung to their early gains and
government-bond yields declined after disappointing jobs data
suggested a potential slowdown in the pace of the economic
Futures tied to the S&P 500 ticked up 0.3%, a day after the
broad-market index closed near its all-time high. Nasdaq-100
futures advanced 1.2%, with gains accelerating after the jobs data
was released. Futures linked to the Dow Jones Industrial Average
slipped 0.1%, reversing their early rise.
The yield on the 10-year Treasury note edged down to 1.509%,
from 1.561% on Thursday, on track for a sixth consecutive day of
The monthly jobs report showed employers added 266,000 jobs in
April and the unemployment rose to 6.1%. These figures
significantly missed the expectations of economists who estimated
that payrolls grew by one million and the unemployment rate fell to
5.8%. It sat at a record 14.8% in April 2020 in the midst of the
early stages of the pandemic.
"We were very surprised," said Chris Zaccarelli, chief
investment officer of Independent Advisor Alliance, adding that he
thinks that the economy will continue to recover, but at a slower
pace than expected.
Still, stocks are poised for a second week of muted gains, with
sentiment bolstered by Federal Reserve officials reiterating
pledges to refrain from tightening monetary policy until the labor
market is recovered.
The acceleration in Nasdaq futures in the wake of the data
highlights the continued back and forth in the market between
technology shares -- which have flourished as interest rates have
stayed low and the economy floundered -- and cyclical corners of
the market that many investors thought were poised to benefit from
a speedy economic recovery. On signs of flagging economic momentum,
investors again piled back into the tech-heavy Nasdaq.
JJ Kinahan, chief market strategist at TD Ameritrade, said
technology stocks are seeing a "relief rally" after trading lower
for much of the week.
"I think there was a big fear going into [today's report] that
this number was going to come in so hot and put extreme pressure on
the Fed," Mr. Kinahan said. "Many expected it could be...the number
that started to take the markets down because it would be such an
He added that Friday's figure, combined with the downward
revision in the March jobs number to 770,000, means the Federal
Reserve will likely need to see much more substantial progress on
the employment situation before considering a change in monetary
"This week was really still a combination of the post-Covid
recovery and how interest-rate policy will respond," said Kiran
Ganesh, a multiasset strategist at UBS Global Wealth Management.
"The performance of some cyclical stocks and commodities suggests
that this reopening trade is still on track."
Investors are "trying to gauge the extent to which policy makers
are going to keep monetary stimulus in place and whether we're
tipping over into the stage where good economic data starts to be a
problem for financial markets because it brings forward the time
the central banks start very tentatively tightening policy," said
Sebastian Mackay, a multiasset fund manager at Invesco. "I think
we're getting there."
Earnings season continues, with self-driving truck company
Nikola among those reporting Friday.
"We're still in a cyclical upswing, which should drive equities
higher on average," Mr. Mackay said. "On average, most of the
earnings numbers have been at or above expectations. It is about
delivery of those expectations of earnings needed to sustain
Ahead of the opening bell, Peloton rose almost 6% after
reporting a smaller quarterly loss than analysts expected and sales
that more than doubled. Travel-booking website Expedia added 5%
after also reporting a narrower loss than Wall Street forecast.
Energy drinks maker Monster Beverage fell over 5% after reporting
first-quarter earnings that missed estimates and a shortage of
In commodities, copper prices surpassed their 2011 highs and
were on course to close at a record, fueled by bets on the global
economic rebound and on rising demand from efforts to decarbonize
the power and transportation sectors. Three-month copper forwards
rose 2.4% to $10,355 a metric ton on the London Metal Exchange. In
New York, copper futures on CME Group's Comex rose 2.5% to $4.72 a
Overseas, the pan-continental Stoxx Europe 600 climbed 0.5%.
The Shanghai Composite Index pulled back 0.7%, and Japan's
Nikkei 225 advanced 0.1%.
Gunjan Banerji contributed to this article.
Write to Anna Hirtenstein at email@example.com
(END) Dow Jones Newswires
May 07, 2021 09:34 ET (13:34 GMT)
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