U.S. stock index futures are indicating a stronger start to Wednesday’s session, suggesting equities could rebound after Tuesday’s subdued trading.
The advance in futures follows the release of a widely watched Labor Department report showing U.S. job growth in January far exceeded expectations.
According to the report, nonfarm payrolls increased by 130,000 in January, following a downwardly revised gain of 48,000 in December.
Economists had forecast an increase of 70,000 jobs, compared with the initially reported 50,000 gain for the prior month.
The unemployment rate dipped to 4.3% in January from 4.4% in December, whereas economists had anticipated it would hold steady.
Stronger labor market data may reinforce confidence in the resilience of the U.S. economy, though it could also temper expectations for near-term Federal Reserve rate cuts.
Investors will also be watching Friday’s consumer price index report, which could offer further clues about the trajectory of interest rates.
On Tuesday, markets struggled for direction after two consecutive days of gains. The Dow briefly touched a fresh intraday record early in the session, but the Nasdaq and S&P 500 fluctuated around the flatline throughout the day.
By the close, performance was mixed: the Dow edged up 52.27 points, or 0.1%, to 50,188.13, while the S&P 500 declined 23.01 points, or 0.3%, to 6,941.81. The Nasdaq fell 136.20 points, or 0.6%, to 23,102.47.
The uneven trading reflected caution ahead of the monthly employment report.
Meanwhile, investors paid little attention to a Commerce Department release showing U.S. retail sales were unexpectedly flat in December.
Retail sales were essentially unchanged after rising 0.6% in November, missing expectations for a 0.4% increase.
Excluding motor vehicle and parts dealers, sales were also flat following a 0.4% gain in November. Analysts had projected a 0.3% increase excluding autos.
“The December retail sales report shows that consumers paused their spending at the end of the holiday season after a strong spending spree in October and November,” said Nationwide Chief Economist Kathy Bostjancic.
She added, “The stagnant retail sales in December provides a soft hand-off to Q1 consumer spending, but we look for a surge in tax refunds, estimated to be $50 billion higher than last year, and the still strong wealth effect will buoy consumer spending in Q1 and support solid GDP growth.”
In other economic news, the Labor Department reported that import prices rose modestly in December, in line with expectations.
Housing stocks outperformed, supported by a notable drop in Treasury yields. The Philadelphia Housing Sector Index climbed 3.4% to its highest close in five months.
Other rate-sensitive sectors also gained ground. The Dow Jones Utility Average advanced 1.9%, while the Dow Jones U.S. Real Estate Index rose 1.3%.
Conversely, brokerage shares declined sharply, pulling the NYSE Arca Broker/Dealer Index down 2.5% after it had closed at a record high the previous day.
Computer hardware, airline, and oil service stocks also ended the session lower.