U.S. stock futures pointed to a stronger open on Friday after a weaker-than-expected July employment report eased concerns that the Federal Reserve could raise interest rates again in the near term.
Futures accelerated higher following the release of the latest Labor Department data, with investors interpreting the softer labour market figures as reducing the likelihood of additional monetary tightening.
July Payrolls Miss Expectations
According to the Labor Department, non-farm payrolls fell by 23,000 jobs in July after June’s gain was revised down to 20,000.
Economists had expected payrolls to increase by 88,000 following the initially reported gain of 57,000 in June.
Although the figures point to a cooling labour market, investors viewed the data positively because it lessens the pressure on the Federal Reserve to tighten policy further.
Meanwhile, the unemployment rate edged down to 4.1% from 4.2% in June, surprising economists who had expected it to remain unchanged.
Treasury Yields Retreat After Employment Data
Government bond yields fell sharply following the payroll report.
The yield on the benchmark 10-year U.S. Treasury dropped by more than 1.2%, reflecting increased expectations that interest rates may remain unchanged at the Federal Reserve’s next meeting.
Wall Street Ended Thursday Lower
Thursday’s trading session was marked by cautious and volatile price action ahead of the employment report.
The Dow Jones Industrial Average declined 464.02 points, or 0.9%, to 53,885.10 after closing at a record high the previous day.
The S&P 500 slipped 13.59 points, or 0.2%, to 7,709.96, while the Nasdaq Composite edged 15.09 points lower, or 0.1%, to 26,348.35.
Salesforce Leads Dow Lower
Salesforce (NYSE:CRM) was among the biggest drags on the Dow, falling 3.2% after CNBC reported the company would appoint former Oracle (NYSE:ORCL) executive Miguel Milano as its new operating chief.
Other Dow components also came under pressure, with Boeing (NYSE:BA) dropping 3.3% and Honeywell (NASDAQ:HON) losing 3%.
Sector Performance Was Mixed
Ahead of Friday’s jobs report, investors also reviewed the latest weekly unemployment claims.
Initial jobless claims rose by 1,000 to 199,000 during the week ended 1 August, remaining below economists’ expectations of 202,000.
Among sector moves, telecom stocks rebounded strongly after Wednesday’s decline, with the NYSE Arca North American Telecom Index climbing 3.1%.
Oil service companies also advanced as crude prices rebounded sharply, lifting the Philadelphia Oil Service Index by 3%.
Airline stocks moved in the opposite direction, with the NYSE Arca Airline Index falling 3.1% as higher oil prices increased concerns over fuel costs.
Housing and brokerage stocks also weakened after posting gains earlier in the week.