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U.S. equity futures edged lower in early Friday trading, while Treasury yields and the dollar held steady, as investors braced for a critical January jobs report that could define market direction over the coming weeks.
Stocks ended higher on Thursday, thanks in part to a pullback in Treasury bond yields and a series of solid corporate earnings reports that underscored the strength of the fourth quarter reporting season.
A relatively benign tally for weekly jobless claims, meanwhile, with data showing around 219,000 Americans filing for first-time unemployment benefits, raised the prospect of a solid payroll report later this morning that could provide stocks with an early February spark.
Economists are looking for a headline reading of 169,000 from today’s Employment Report, a level that is down from December’s 256,000 but largely in-line with the six-month average of 166,000.
However, extreme weather the the midwest and southeast, wildfires in California and planned data revisions from the Bureau of Labor Statistics could deliver a January jobs total that is well outside the frame of Wall Street forecasts.
Fed Chair Jerome Powell and his colleagues will use the January payroll report as a key indicator of labor market strength heading into the new year.
A lot of focus will be on annual benchmark revisions,” said ING’s foreign exchange strategist Francesco Pesole.
“Last year’s provisional revisions indicated that, upon cross-referencing with tax data, the Bureau of Labor Statistics had overestimated job creation by approximately one-third,” he said. “This points to significant issues with their model, and we anticipate substantial adjustments to the monthly payroll numbers.”
The U.S. dollar index was little-changed at 107.708 against a basket of its global peers heading into the January jobs reading, with benchmark 2-year Treasury note yields holding at 4.233%.
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On Wall Street, Amazon (AMZN) shares are likely to be the focus of the early session following the tech and retail giant’s mixed set of fourth quarter earnings last night that included slower-than-expected growth from its flagship Amazon Web Services division.
Shares in the group were last marked 2.7% lower in premarket trading to indicate an opening bell price of $232.30 each.
Stocks more broadly are trading only modestly lower heading into the jobs report, with futures tied to the S&P 500 indicating a modest 3 point decline and those linked to the Dow Jones Industrial Average priced for a 17 point gain.
The tech-focused Nasdaq, meanwhile, is called 20 points lower with Amazon, Nvidia (NVDA) and Palantir (PLTR) active in premarket trading.
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In overseas markets, Europe’s Stoxx 600 eased from yesterday’s all time high and was last marked 0.08% lower in Frankfurt, while Britain’s FTSE 100 fell 0.21% in London following yesterday’s Bank of England rate cut.
Overnight in Asia, the yen hit a two-month high against the U.S. dollar on bets for a near-term rate hike from the Bank of Japan, sending the Nikkei 225 0.72% lower into the close of trading.
The broader MSCI ex-Japan index, meanwhile, was marked 0.59% higher with China’s benchmark CSI 300 rising to a one-month high in Friday trading.
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