A steep decline in global oil prices, as well as a softer U.S. dollar, has stocks trading modestly higher Thursday ahead of key jobs data prior to the start of trading.
Updated at 8:40 am EST
U.S. equity futures nudged higher Thursday, boosted by an overnight slide in oil prices and a modestly softer U.S. dollar, as investors braced for a series of job market readings that could add to growing concerns that inflation will continue to blunt growth prospects in the world’s largest economy.
An otherwise solid reading for manufacturing activity in May, based on closely-watched ISM data, was marred by suggestions that factories will likely cut-back on hiring in the coming months as supply chain disruptions and input cost increases complicate production.
Payroll processing group ADP published its National Employment report this morning at 8:15 am Eastern time, with data showing a much smaller-than-expected private sector gain of 128,000, while weekly jobless claims showed an 11,000 decline, to 200,000, for the period ending on May 28.
Friday, of course, will see the release of the official May employment report, which is expected to show hiring slowed to a net 325,000 new positions, the weakest since February.
“Yesterday’s far stronger than expected ISM Manufacturing was one data point that helped treasury yields back higher, as well perhaps as the de facto start of Fed balance sheet reduction, or quantitative tightening,” said Saxo Bank analysts. “Fresh highs in yields could put fresh pressure on global equity markets after their recent strong consolidation off the lows.”
Benchmark 10-year note yields were trading at a near two-week high of 2.897% amid the faster inflation prospects and the start of the Federal Reserve’s balance sheet run-off, which will dump $30 billion in Treasuries and $17.5 billion in mortgage bonds onto the market each month, while the U.S. dollar index slipped 0.33% against a basket of its global peers to 102.154.
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Oil prices moved sharply lower in overnight trading, taking WTI crude close to $110 per barrel, following a report from London’s Financial Times that Saudi Arabia is prepared to boost its monthly output in order to meet the 1 million barrel per day fall-off from Russia linked to western sanctions.
President Joe Biden is also reportedly prepared to fly to Riyadh as part of his effort to find relief for record high U.S. gasoline prices, which hit a fresh all-time peak of $4.71 per gallon last night, according to AAA data.
WTI crude futures for July delivery were marked $1.36 lower in early New York trading at $113.90 per barrel while Brent contracts for August, the global benchmark, tumbled $1.11 to $115.20 per barrel.
In overseas markets, European stocks traded modestly higher, with the Stoxx 600 rising 0.51% in mid-day Frankfurt trading while the region-wide MSCI ex-Japan index fell 0.8% in a follow-on move from last night’s close on Wall Street.
Heading into the Thursday, futures tied to the Dow Jones Industrial Average indicating a 120 point opening bell gain while those linked the S&P 500 were priced for a 16 point upside bump. Futures linked to the tech-focused Nasdaq, which is down 24.2% for the year, are looking at a 60 point opening bell advance.
Meta Platforms (FB) – Get Meta Platforms Inc. Class A Report shares were one of the most active names in pre-market, edging 0.9% higher in pre-market trading as investors reacted to news that Chief Operating Officer Sheryl Sandberg, the social media group’s second in command, will step down later this year.
Sandberg, who is widely credited with navigating Facebook’s transition from a brand value to ad-generated revenue, served under CEO Mark Zuckerberg for fourteen years and was, in many respects, the professional public face of the social media giant.
GameStop (GME) – Get GameStop Corp. Class A Report shares, meanwhile, fell 0.33% after the video game retailer and meme stock favorite posted a wider-than-expected first quarter loss but noted solid gains from online sales.
Hewlett Packard Enterprise (HPE) – Get Hewlett Packard Enterprise Co. Report was also on the move, falling 6.2% after the IT services posted modestly weaker-than-expected second quarter earnings and forecast muted near-terms sales growth.
On the upside, Ford Motor (F) – Get Ford Motor Company Report rose 1.8% ahead of what could be a ‘major economic announcement’ from the carmaker prior to the start of trading as it looks to re-vamp its dealer network amid its ongoing challenge to Tesla’s TSLA EV market dominance.
