The major U.S. index futures are pointing to a lower opening on Friday following the release of the closely watched monthly employment report.
The downward momentum on Wall Street comes as the report from the Labor Department showed weaker than expected job growth in the month of April but a bigger than expected drop by the unemployment rate.
After falling sharply early in the session, stocks staged a significant recovery attempt over the course of the trading day on Thursday. The major averages pared their losses considerably before ending the session mixed.
While the Dow managed to end the day slightly higher, the Nasdaq and the S&P 500 closed in negative territory. The Dow inched up 5.17 points or less than a tenth of a percent to 23,930.15, but the Nasdaq edged down 12.75 points or 0.2 percent to 7,088.15 and the S&P 500 dipped 5.94 points or 0.2 percent at 2,629.73.
The recovery attempt on Wall Street came as traders picked up stocks at reduced levels, with the Dow bouncing off its lowest intraday level in a month.
Uncertainty about the outcome of highly anticipated trade talks between the U.S. and China contributed to the early sell-off.
The U.S. delegation led by Treasury Secretary Steven Mnuchin is expected to raise concerns with Chinese Vice Premier Liu He about a number of China’s trade practices.
In a post to Twitter, President Donald Trump said, “Our great financial team is in China trying to negotiate a level playing field on trade!”
“I look forward to being with President Xi in the not too distant future,” he added. “We will always have a good (great) relationship!”
Ahead of the talks, the Commerce Department released a report showing a significantly narrower U.S. trade deficit in the month of March.
The Commerce Department said the trade deficit narrowed to $49.0 billion in March from a revised $57.7 billion in February. Economists had expected the trade deficit to narrow to $50.0 billion.
The narrower trade deficit came as the value of exports jumped by 2 percent to $208.5 billion, while the value of imports tumbled by 1.8 percent to $257.5 billion.
However, the Commerce Department said the trade deficit with China widened to $35.4 billion in March from $34.7 billion in February, as imports rose by more than exports.
Negative sentiment was also generated by the release of a report from the Institute for Supply Management showing a bigger than expected slowdown in the pace of growth in the service sector in the month of April.
The ISM said its non-manufacturing index fell to 56.8 in April from 58.8 in March. While a reading above 50 still indicates growth in the service sector, economists had expected the index to show a more modest decrease to 58.1.
Tobacco stocks showed a significant move to the upside on the day, driving the NYSE Arca Tobacco Index up by 1.5 percent. The index bounced off its lowest closing level in almost three months.
Considerable strength also emerged among housing stocks, as reflected by the 1.3 percent gain posted by the Philadelphia Housing Sector Index.
On the other hand, notable weakness remained visible among natural gas stocks, with the NYSE Arca Natural Gas Index slumping by 2.3 percent.
Most of the other major sectors ended the day showing more modest moves, contributing to the lackluster close by the broader markets.
Commodity, Currency Markets
Crude oil futures are rising $0.33 to $68.76 a barrel after advancing $0.50 to $68.43 a barrel on Thursday. Meanwhile, after climbing $7.10 to $1,312.70 an ounce in the previous session, gold futures are edging up $1.80 to $1,314.50 an ounce.
On the currency front, the U.S. dollar is trading at 108.66 yen compared to the 109.19 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1967 compared to yesterday’s $1.1988.
Asian stocks closed broadly lower on Friday as investors kept a close watch on U.S.-China trade talks and waited for cues from the U.S. jobs report due later in the day.
China’s Shanghai Composite Index slid 9.83 points or 0.3 percent to finish at 3,091.03, as traders remained focus on the U.S.-China trade talks as well as upcoming U.S. employment data.
Hong Kong’s Hang Seng Index slumped 386.87 points or 1.3 percent to 29,926.50 after the latest survey from Nikkei showed the private sector in Hong Kong swung to contraction in April.
Australian shares retreated as banks succumbed to selling pressure on weaker local currency and amid concerns that an extended period of low interest rates may weigh on their net interest rate margins.
The benchmark S&P/ASX 200 Index dropped 35.40 points or 0.6 percent to 6,062.90, and the broader All Ordinaries Index ended down 31.60 points or 0.5 percent at 6,155.40.
The big four banks fell between 0.6 percent and 1.6 percent, while investment bank Macquarie Group inched up 0.2 percent after posting a record full year net profit.
Wealth manager AMP gained half a percent after it strenuously denied allegations it may have committed a criminal offence. A drop in iron ore and aluminum prices weighed on the mining sector, with South32 shares ending down more than 3 percent.
Commercial explosives maker Orica Ltd rallied 3.3 percent on news that it will set aside A$115 million ($86.84 million) towards provision for environmental cleanup.
Seoul stocks fell as investors sold off healthcare stocks on worries over their future growth. The benchmark Kospi tumbled 25.87 points or 1 percent to finish at 2,461.38. Samsung BioLogics slumped 7.8 percent to extend recent losses, while biosimiliar firm Celltrion Inc. lost 4.6 percent.
South Korea posted a current account surplus of $5.18 billion in March, the Bank of Korea said today, up from $3.96 billion in February. The goods account surplus widened to $9.88 billion compared to $9.36 billion a year earlier.
European stocks are turning in a mixed performance during trading on Friday. While the French CAC 40 Index is down by 0.1 percent, the German DAX Index and the U.K.’s FTSE 100 Index are both up by 0.4 percent.
Vestas Wind Systems A/S has fallen after its first-quarter profit declined to 102 million euros from last year’s 160 million euros.
HSBC Holdings has also tumbled after the bank’s first-quarter pre-tax profit fell 4 percent from a year ago due to higher operating expenses.
Lender BNP Paribas has moved notably lower after posting a 17 percent drop in first quarter net income on weak revenues.
Societe Generale has also moved lower. The bank reported higher first quarter profits but overall revenue at its investment banking business declined amid the low-interest rate environment.
Air France KLM shares have plunged as much as 7 percent after the airline said it expects profits to fall this year due to the effect of strikes at its main French unit.
Meanwhile, British Airways-parent IAG has jumped after its first quarter adjusted operating profit surged up 75 percent.
French electric utility EDF has also risen after it bought the Neart na Gaoithe wind farm project from global wind and solar developer Mainstream Renewable Power for £441 million.
Germany’s Lanxess shares have jumped after the specialty chemicals company lifted guidance for fiscal 2018 after reporting an increase in first quarter net income.
In economic news, Eurozone economic activity expanded strongly in April, but the pace of expansion slowed marginally since March, final data from IHS Markit showed.
The composite output index fell slightly to 55.1 in April from 55.2 in March. According to flash estimate, the index remained unchanged at 55.2 in April.
U.S. Economic Reports
A closely watched report released by the Labor Department showed weaker than expected job growth in the month of April, although the unemployment rate still fell to its lowest level in over seventeen years.
The Labor Department said non-farm payroll employment climbed by 164,000 jobs in April after rising by an upwardly revised 135,000 jobs in March.
Economists had expected employment to increase by 192,000 jobs compared to the addition of 103,000 jobs originally reported for the previous month.
Meanwhile, the report said the unemployment rate fell to 3.9 percent in April after holding at 4.1 percent for six straight months. The unemployment rate had been expected to edge down to 4.0 percent.
With the bigger than expected decrease, the unemployment rate dropped to its lowest level since a matching rate in December of 2000.
The Labor Department also said average hourly employee earnings inched up by $0.04 or 0.1 percent to $26.84 in April.
Compared to the same month a year, average hourly earnings were up by 2.6 percent in April, unchanged compared to the revised growth seen in March.
At 12:45 pm ET, New York Federal Reserve President William Dudley is due to speak about the “Financial Tumult of Our Times and Challenges Ahead” at an event organized by Bloomberg in New York.
San Francisco Fed President John Williams is scheduled discuss the natural rate of interest at the Currencies, Capital, And Central Bank Balances: A Policy Conference in Stanford, California, at 3 pm ET.
At 5:30 pm, Fed Vice Chairman of Supervision Randal Quarles is due speak on “Financial Stability, Regulations and the Balance Sheet” at the conference in Stanford, California.
Dallas Fed President Robert Kaplan, Atlanta Fed President Raphael Bostic, and Kansas City Fed President Esther George will participate in a panel discussion on “Monetary Policy and Reform in Practice” at the conference in Stanford, California, at 8 pm ET.
Stocks In Focus
Shares of Weight Watchers (WTW) are moving significantly higher in pre-market trading after the weight loss company reported better than expected first quarter results and raised its full-year guidance.
Restaurant chain Shake Shack (SHAK) is also likely to see early strength after reporting first quarter results that exceeded analyst estimates and raised its full-year outlook.
Shares of CBS Corp. (CBS) are also moving higher in pre-market trading after the mass media company reported first quarter results that beat expectations on both the top and bottom lines.
On the other hand, shares of Twitter (TWTR) may move to the downside after the social media giant urged users to change their passwords after the company found a bug that stored passwords unmasked in an internal log.
by RTTNews Staff Writer
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