4:15pm: Employment data doesn't mean the Fed is done raising rates: analyst
The Dow closed Friday up 116 points, 0.3%, at 34,838, the Nasdaq Composite lost 3 points to 14,032 and the S&P 500 gained 8 points, 0.2%, to 4,516. The small-cap Russell 2000 index added 20 points, 1%, to 1,920.
Despite losing ground after being up 250 points early in the session, the Dow still did well enough to clinch its best week since July, as did the S&P and Nasdaq.
Investors reacted to the US economy adding 187,000 jobs in August, ahead of forecasts of 170,000. July's number was revised down to 157,000 from an original reading of 187,000.
“It would be a mistake to look at today’s employment report, along with recent data, and say the Fed is done [raising interest rates],” said Steve Wyett, chief investment strategist at BOK Financial (NASDAQ:BOKF). “Even though trends in inflation are moving the right direction and a broader view of the employment market would indicate wage pressures should abate, overall economic growth is above trend and inflation remains well above the Fed’s recently confirmed 2% target.”
12:05pm: August unemployment hits highest level in more than a year
US stocks were mixed in noon trading as a higher-than-expected unemployment rate in August could cause the Federal Reserve to pause its rate-hiking cycle.
At midday, the Dow gained 13 points to 34,735, while the S&P 500 eased 5 points at 4,503 and the tech-heavy Nasdaq slipped 46 points to 13,989.
“We’re seeing the soft landing that the market has been looking for,” Yardeni Research president Ed Yardeni said.
“The market is reacting exactly as everyone anticipated it would, it’s rallying on the news that things are slowing down, which is good news.”
Notable movers included shares of Dell Technologies Inc, which soared 23% after the computer company reported better-than-expected 2Q results.
9:45am: US stocks advance as employment report backs pause in rates
US stocks have opened higher after employment data supported hopes that US interest rates have peaked.
Shortly after the opening bell the Dow Jones Industrial Average was up 0.5% at 34,893.62, the S&P 500 was up 0.4% at 4,527.44 and the Nasdaq Composite was up 0.1% at 14,040.14.
Non-farm payrolls for August came in above expectations, but July's figure was revised downwards, while the unemployment rate jumped.
Average hourly earnings surprised on the downside in further good news for the US central bank.
Ian Shepherdson at Panrheon Macroeconomics described the payrolls figure as "trivially above the consensus."
He said: "The big surprise here is the jump in the unemployment rate, which is - unusually - statistically significant."
"The hourly earnings numbers also surprised in the right direction for the Fed, with the 0.2% increase following back-to-back 0.4% gains."
"These hefty increases are out of step with surveys and other indicators pointing to slower wage gains, so we think it likely that the August print marks the start of a renewed softening," he added.
"More immediately, this report clearly increases the pressure on the Fed not to hike this month, and it would now take horrific PPI and CPI data to trigger action. We remain of the view that the Fed is done, and that the next move will be an easing, as soon as next March."
8:45am: Futures extend gains after mixed non-farm payrolls
The non-farm payrolls figures are out and it is a mixed bag.
The US economy added 187,000 jobs in August, ahead of forecasts of 170,000, although July's number was revised down to 157,000 from an original reading of 187,000.
The rate of unemployment rose unexpectedly in August to 3.8%, surprising economists who had predicted it would remain unchanged at 3.5% but growth in average hourly earnings surprised on the downside.
Average hourly earnings rose 0.2% in August compared to July, below the 0.3% expected, although annual growth of 4.3% was in line with expectations.
The figures from the US Bureau of Labour Statistics showed employment continued to trend up in health care, leisure and hospitality, social assistance, and construction. Employment in transportation and warehousing declined.
In August, the labor force participation rate rose by 0.2 percentage point to 62.8 percent, after being flat since March.
7:00am: Futures tick higher ahead of non-farm payrolls
US stock futures are pointing to a bright start on Wall Street on Friday although much will depend on the non-farm payrolls released before the opening bell.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.4% higher, while those for the S&P 500 rose 0.3%, and contracts for the Nasdaq 100 futures were up 0.2%.
The pace of job creation in the US is expected to have slowed in August’s non-farm payrolls report.
Economists forecast that the economy added 170,000 jobs, down from 187,000 in July. The unemployment rate is expected to have remained flat at 3.5%.
Ipek Ozkardeskaya at Swissquote Bank said a “softer than expected NFP figure, a slight deterioration in the unemployment rate, or softer-than-expected wages data could further cement the idea that the Fed will skip a pause at the September meeting, and maybe at the November as well.”
Elsewhere, the health of the manufacturing sector will be in the spotlight with The Institute for Supply Management’s manufacturing purchasing managers’ index expected to record a reading of 47 in August, up from 46.4 in July.
Stocks to watch include Dell Technologies Inc, up over 9% in premarket deals, boosted by second-quarter revenue and earnings which easily exceeded expectations.
Broadcom is 4.6% lower, on softer guidance despite third quarter revenue being up 5% on last year, and earnings coming in ahead of expectations.
But lululemon athletica is around 2% higher after it posted strong second-quarter numbers well ahead of expectations, and, triggered a guidance upgrade for the full year.
There is more on the early movers and shakers here.