Friday June 3rd


Stock futures fall on Friday as rates rise on the back of a strong jobs report

U.S. stock index futures slid early Friday morning as investors digested a stronger-than-expected jobs report. Futures tied to the Dow Jones Industrial Average were down 205 points, or 0.6%. S&P 500 futures slipped 0.9%, while Nasdaq 100 futures fell 1.4%. Hiring in the U.S. remained elevated in May. Nonfarm payrolls added 390,000 jobs last month, the Bureau of Labor Statistics reported Friday. Economists expected 328,000 jobs added, according to Dow Jones. “Numbers this strong would likely reverse any hopes the Fed would consider a pause in rate hikes after the June/July increases, because it would signal the labor market remains very tight,” Tom Essaye of the Sevens Report said. The benchmark 10-year Treasury yield climbed after the report, above the 2.97% level. Higher rates discount the value of future earnings, which can make stocks look less attractive. Meanwhile, Tesla shares fell 4% in the premarket after Reuters reported, citing an internal email, that CEO Elon Musk wants to cut 10% of jobs at the car maker. According to Reuters’ report, Musk also said in the email that he has a “super bad” feeling about the economy. Stocks are coming off a strong session in which the major averages rose for the first time in three sessions. The Dow added 435.05 points, or 1.3%. The S&P 500 gained 1.8% and the Nasdaq Composite advanced 2.7%. Thursday’s gains pushed the major averages into positive territory for the week. The S&P 500 is up 0.5% and headed for a second winning week in a row. Trading was choppy at the start of trading Thursday with investors divided on recession calls and if the Federal Reserve may be positioned to take a break from its interest rate hikes. Fed Vice Chair Lael Brainard on Thursday told CNBC it’s unlikely to do so anytime soon and that it’s “got a lot of work to do to get inflation down to our 2% target.” Investors were also digesting employment data released by payroll processing firm ADP in the morning, which showed the slowest job creation pace of the pandemic-era recovery. Stocks rallied into the close, finishing near session highs, as investors saw value in technology shares and other names beaten down in this year’s pullback. Shares in Asia-Pacific rose on Friday as several major regional markets were closed for a holiday and investors looked ahead to the release of U.S. jobs data for May. Japanese stocks led gains among the region’s major markets, with the Nikkei 225 gaining 1.27% on the day to 27,761.57 as shares of Fast Retailing soared 5.86%. The Topix index rose 0.35% to 1,933.14. The Kospi in South Korea edged 0.44% higher to close at 2,670.65, while Australia’s S&P/ASX 200 climbed 0.88% to end its trading day at 7,238.80. Oil slipped on Friday after OPEC+ decided to increase production targets by slightly more than planned, although tight global supply and rising demand as China eases Covid restrictions limited the decline. The Organization of the Petroleum Exporting Countries and allies, or OPEC+, on Thursday increased their output boost to 648,000 barrels per day (bpd) in July and August rather than 432,000 bpd as previously agreed. Brent crude fell 90 cents, or 0.8%, to $116.71 a barrel, after rising $2 intra-day on Thursday. U.S. West Texas Intermediate (WTI) crude slipped $1, or 0.86%, to $115.87. Gold prices were headed for a third straight weekly gain on Friday, although they eased slightly on the day as investors waited for the key U.S. jobs report and as Treasury yields ticked higher. Spot gold was 0.2% lower at $1,864.49 per ounce by 0953 GMT, after hitting its highest level since May 9 at $1,873.79. Gold prices have risen about 0.6% so far this week. U.S. gold futures also eased 0.2% to $1,867.20.