Friday January 8th

8-01-2021

Dow futures are up nearly 100 points as Wall Street shakes off disappointing jobs report

U.S. stock index futures rose on Friday even after the release of data showing the U.S. economy unexpectedly lost jobs last month. Those gains put Wall Street on track to end the first trading week of the year on a high note. Futures contracts tied to the Dow Jones Industrial Average were up 91 points, or 0.3%. S&P 500 and Nasdaq 100 futures were up by 0.4% and 0.6%, respectively. The U.S. economy lost 140,000 jobs in December, the Labor Department said. Economists polled by Dow Jones expected a gain of 50,000. The unexpected drop in employment came as the recent surge in Covid-19 cases across the country has forced state and local governments to re-take stricter measures to mitigate the outbreak. More than 21.5 million coronavirus cases have now been confirmed in the U.S., according to data from Johns Hopkins University. Futures briefly pared gains before recovering from that slight dip. Adam Crisafulli, founder of Vital Knowledge, wrote that the weaker-than-expected print raises the possibility of more government aid from Presdent-elect Joe Biden’s administration. “Biden’s team was already going to be pushing for increased fiscal stimulus and the December report provides them w/even more ammunition to make their case (while the Fed may stop thinking aloud about thinking about tapering),” Crisafulli said in a note to clients. Friday’s moves come after the three major averages set record closing highs, including the Nasdaq Composite, which jumped 2.6% to close above 13,000 for the first time. The Dow and S&P 500 rose 0.7% and 1.5%, respectively. Stocks started off the new year with a slump on Monday, but the market has since churned higher despite the turmoil in Washington, where a riot at the Capitol on Wednesday delayed the procedural congressional confirmation of Presidential-elect Joe Biden’s victory. The Dow and S&P 500 have notched three-day winning streaks. This week also saw Democrats win two key Senate races in Georgia, according to NBC News projections, boosting hopes on Wall Street for further fiscal stimulus. Thursday night, President Donald Trump acknowledged for the first time that a new administration will take over on Jan. 20. Fundstrat’s Tom Lee said on CNBC’s “Closing Bell” said that growing clarity in Washington and the amount of cash sitting on the sidelines could lead the stocks higher, with cyclical stocks in particular benefitting. “If we look at just the first few days of this year, the leadership has come from things energy and the cyclicals, including financials and industrials, or even discretionary excluding Amazon. I think that’s kind of a precursor to what the full year will look like,” Lee said. The strategist also said that stocks “could make a really big move” in the coming weeks as the level of fear in the market declines. Gary Schlossberg, a global strategist at the Wells Fargo Investment Institute, said the market’s recent moves could be reinforced by growth in corporate earnings this year. “We think that some of the optimism will be manifested to some extent by improved earnings growth, and maybe the market is pricing in some of that as well of late, but we still think that gives the market some added mileage,” Schlossberg said. Shares in Asia-Pacific were mostly higher on Friday after stocks on Wall Street cruised to new record highs overnight. South Korea’s Kospi led gains among major regional markets as it jumped 3.97% to close at 3,152.18. As the first trading week of 2021 comes to an end, the index has already jumped about 9.7% from its final close in 2020. Elsewhere in Japan, the Nikkei 225 advanced 2.36% to close at 28,139.03 while the Topix index gained 1.57% to finish its trading day at 1,854.94. The broader Hang Seng index in Hong Kong gained 1.2% to close at 27,878.22. Mainland Chinese stocks dipped on the day: the Shanghai composite shed 0.17% to 3,570.11 while the Shenzhen component declined 0.242% to 15,319.29. Oil prices hit 11-month highs and were on track for a weekly gain on Friday, supported by Saudi Arabia’s pledge to cut output and a global stocks rally as investors looked beyond rising coronavirus cases. Brent crude climbed 83 cents, or 1.5%, to $55.21 a barrel, the highest since late February, and U.S. West Texas Intermediate (WTI) gained 66 cents, or 1.3%, to $51.49, also its highest level since late February. Both were on track for weekly gains of more than 6%. Gold fell below the key $1,900 technical level on Friday and was on track for a weekly decline, pressured by gains in the dollar and Treasury yields ahead of U.S. nonfarm payroll data that could give further clues on the country’s economic health. Spot gold dropped 1.3% to $1,887.66 per ounce and was down 0.6% for the week. U.S. gold futures shed 1.2% to $1,890.30.