The major U.S. index futures are currently pointing to a modestly lower open on Thursday, with stocks likely to move back to the downside after ending yesterday’s lackluster session slightly higher.
Ongoing concerns about rising tensions in the Middle East may weigh on Wall Street, although trading activity is likely to remain subdued ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.
Economists currently expect the report to show employment rose by 140,000 jobs in September after climbing by 142,000 jobs in August, while the unemployment rate is expected to hold at 4.2 percent.
The data could impact the outlook for the U.S. economy as well as expectations regarding how aggressively the Federal Reserve will lower interest rates.
With the jobs data looming, CME Group’s FedWatch Tool is currently indicating a 63.0 percent chance the Fed will lower rates by a quarter point and a 37.0 percent chance of another half point rate cut.
A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report this morning showing an uptick by first-time claims for U.S. unemployment benefits in the week ended September 28th.
The report said initial jobless claims rose to 225,000 last week, an increase of 6,000 from the previous week’s revised level of 219,000.
Economists had expected jobless claims to inch up to 220,000 from the 218,000 originally reported for the previous week.
The bigger than expected rebound came a week after jobless claims fell to their lowest level since hitting 216,000 in the week ended May 18th.
After recovering from an early move to the downside, stocks showed a lack of direction over the course of the trading session on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line before eventually closing slightly higher.
The Dow edged up 39.55 points or 0.1 percent to 42,196.52, the Nasdaq inched up 14.76 points or 0.1 percent to 17,925.12 and the S&P 500 crept up 0.79 points or less than a tenth of a percent to 5,709.54.
The early weakness on Wall Street partly reflected concerns about escalating tensions in the Middle East following Iran’s ballistic missile attack against Israel on Tuesday.
While Iran has said it is not interested in a wider war, the attacks have contributed to a surge by the price of crude oil, leading to worries higher energy prices will lead to a resurgence in inflation.
Waning optimism the Federal Reserve will continue to aggressively lower interest rates also weighed on stocks after payroll processor ADP released a report showing stronger than expected private sector job growth in the month of September.
ADP said private sector employment climbed by 143,000 jobs in September after rising by an upwardly revised 103,000 jobs in August.
Economists had expected private sector employment to advance by 120,000 jobs compared to the addition of 99,000 jobs originally reported for the previous month.
Selling pressure waned shortly after the start of trading, however, as traders continued to express optimism about the outlook for the economy following the jobs data.
While most of the major sectors showed only modest moves, semiconductor stocks saw a significant rebound following recent weakness, driving the Philadelphia Semiconductor Index up by 1.5 percent.
Considerable strength was also visible among networking stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Networking Index.
Computer hardware and energy stocks also saw strength on the day, while airline and housing stocks moved to the downside.