U.S. stock index futures pointed to a higher open on Thursday as Treasury yields declined, potentially extending the rebound recorded during the previous session.
The yield on the benchmark 10-year Treasury note fell by more than 6 basis points after ending Wednesday unchanged at its highest closing level in more than a year.
Treasury yields moved further lower following the release of U.S. economic data showing a slight increase in initial jobless claims.
Initial Jobless Claims Rise to 206,000
The Labor Department reported that first-time applications for U.S. unemployment benefits increased by 2,000 to 206,000 in the week ended August 29.
The previous week’s reading was revised to 204,000 from the initially reported 203,000. Economists had forecast claims of 205,000.
Investors are now awaiting Friday’s monthly employment report. Economists expect U.S. employment to increase by 55,000 jobs in August after declining by 23,000 in July, while the unemployment rate is forecast to rise to 4.2% from 4.1%.
The employment figures are expected to provide further information for investors assessing the outlook for interest rates ahead of the Federal Reserve’s next monetary policy meeting later this month.
Daniela Hathorn, Senior Market Analyst at Capital.com, said: “Weaker labor-market figures could strengthen the argument for patience, while resilience in employment alongside sticky inflation would make the hawkish case increasingly difficult to dismiss,”
She added, “Investors have been remarkably resilient so far, but that resilience is likely to be tested if oil, yields and expectations for Fed tightening begin moving higher simultaneously.”
U.S. Stocks Rebounded on Wednesday
U.S. equities finished higher on Wednesday, recovering some of the declines recorded over the previous three sessions.
The Dow Jones Industrial Average gained 295.07 points, or 0.6%, to close at 53,061.95. The Nasdaq Composite advanced 118.05 points, or 0.5%, to 26,217.82, while the S&P 500 increased 35.13 points, or 0.5%, to 7,666.60.
The S&P 500 had previously fallen to its lowest level in nearly a month.
Treasury yields and crude oil prices initially declined during Wednesday’s session before subsequently recovering from their earlier levels.
ADP Private Employment Rises by 38,000
Wednesday’s ADP employment report showed that U.S. private-sector payrolls increased by 38,000 jobs in August following an upwardly revised increase of 46,000 in July.
Economists had expected an increase of 48,000 jobs, compared with the initially reported July gain of 44,000.
The August increase represented the slowest pace of private-sector job creation since January, when employers added 11,000 positions.
The labor market data are being assessed alongside inflation indicators as investors consider the potential direction of Federal Reserve policy.
Gold and Oil Service Stocks Advance
Several sectors moved higher during Wednesday’s session.
The NYSE Arca Gold Bugs Index gained 2.9%, while the Philadelphia Oil Service Index increased 2.4%.
Telecommunications, airline and biotechnology stocks also advanced, while software shares moved lower.