Stock Futures Today – Dow struggles to retain gain, tech stocks resume selloff after better jobs report
U.S. stock benchmarks Friday morning gave up early gains and a technology stock rout resumed as investors parsed the latest monthly jobs update from the Labor Department which beat economists’ consensus estimates.
The labor-market data provided evidence that the economy was recovering slowly from the coronavirus pandemic but also fed fears of a rise in inflation in 2021 which pushed up bond yields further.
How are stock benchmarks performing?
-
The Dow Jones Industrial Average
DJIA,
-0.28%
traded 31 points, or 0.1%, higher to around 30,961. -
The S&P 500 index
SPX,
-0.73%
retreated 9 points at around 3,760, a decline of 0.2%. -
The Nasdaq Composite Index
COMP,
-2.09%
was down 176 points, or 1.4%, to reach about 12,550.
On Thursday, the Dow ended 345.95 points, or 1.1%, lower at a one-month nadir of 30,924.14, the S&P 500 fell 51.25 points, or 1.3%, to 3,768.47, the Nasdaq Composite Index slid 274.28 points, or 2.1%, to reach 12,723.47, its lowest in three months and was within 27 basis points of a 10% correction.
What’s driving the market?
Markets are wrestling with good news on the economic front and what that means for bond yields after the U.S. created 379,000 new jobs in February—marking the biggest increase in four months. Economists surveyed by Dow Jones had expected 210,000 jobs to have been added, while the unemployment rate slipped to 6.2% from 6.3%, although economists widely believe the real rate is much higher.
“It’s kind of a tug-o-war,” explained Randy Frederick, vice president trading and derivatives at Schwab Center for Financial Research, told MarketWatch via email.
“Is good news good news, even if it means higher rates? I’m not sure the market has answered this question just yet,” he said.
The jobs data suggest that vaccination distribution and fiscal stimulus from Congress is providing a jolt to the economy and may push up inflation in the aftermath of the recession caused by the public health crisis .
“At a time when the market was already grappling with the steep rise in bond yields, the significant upside surprise to nonfarm payrolls will not be welcomed by bond investors,” wrote Seema Shah, chief strategist, at Principal Global Investors.
Friday morning, the yield on the 10-year Treasury note
TMUBMUSD10Y,
was hovering around 1.57%, after hitting 1.557% on Thursday after investors viewed comments from Federal Reserve Chairman Jerome Powell as not providing sufficient details on how the central bank might act to cool down the economy if it overheats. A too-hot economy would perhaps compel the Fed to raise interest rates quicker than they would prefer, analysts worry.
“However, this data has increased the inflation fear and this is pushing the stock futures lower,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a Friday note.
During a Wall Street Journal event Thursday, Powell said that the bond market selloff during the past few weeks has his attention and the central bank wouldn’t sit back and let the financial market conditions tighten broadly.
Meanwhile, the Senate on Thursday advanced Biden’s $1.9 trillion COVID aid package after making a series of adjustments, and is expected to give its approval sometime over the weekend.
Some of the volatility on Thursday also reflected a “great rotation” as some analysts describe a shift out of highflying technology stocks, viewed as expensive by some measures, to other areas of the market considered undervalued, including energy and financials, amid the rise in yields.
Which stocks are in focus?
-
Chevron Corp.
CVX,
+1.89%
said Friday it has entered an agreement to acquire the 33.925 million shares of Noble Midstream Partners it doesn’t already own in all stock deal. Shares were up 2.4%. - Hibbett Sports Inc. HIBB said Friday it had net income of $23.9 million, or $1.39 a share, in its fiscal fourth quarter to Jan. 30, up from $6.0 million, or 34 cents a share, in the year-earlier period. Its shares were off 4.8%.
- Shares of Norwegian Cruise Line Holdings Ltd. NCLH dropped 9% Friday, after the cruise operator said it started a public offering of 47.58 million share.
- Shares of Big Lots Inc. BIG were trading lower Friday, after the discount retailer reported a fiscal fourth-quarter profit that beat expectations and same-store sales that missed, amid a weaker-than-expected December, but provided an upbeat first-quarter outlook. Shares were off 4.2%.
How are other assets faring?
- The dollar was rising 0.3%, as measured by the ICE U.S. Dollar Index DXY, at 92.093.
- Oil futures rose after the Organization of the Petroleum Exporting Countries said it would roll over current production cuts through April, the U.S. benchmark CL.1 gained $1.92, or 3.1%, to trade at $65.77 a barrel, following a gain of over 4% on Thursday.
- Gold futures GC00 was trading $3.80, or 0.2%, lower at $1,696 an ounce.
- Equities traded mixed in Europe, with the pan-European Stoxx 600 index SXXP down 0.5% and London’s FTSE 100 UKX trading 0.3% higher.
- Stocks pulled back in Asia: the Shanghai Composite SHCOMP ended Friday trade less than 0.1% lower, Hong Kong’s Hang Seng Index HSI lost 0.5%, and China’s CSI 300 000300 fell 0.3%, while Japan’s Nikkei 225 NIK shed 0.2%.
Stock Futures Today – Dow struggles to retain gain, tech stocks resume selloff after better jobs report
