Stock futures rose on Monday after a softer-than expected April jobs report on Friday prompted hopes that inflation might ease and the Federal Reserve might cut interest rates.
At last check futures on the Dow Jones Industrial Average indicated an open 136 points higher to 38,968, while those on the S&P 500 rose 18 to 5,173.75. The Nasdaq Composite was indicated 46 points to 18,047.50 higher at the market open.
Stocks finished higher Friday, also powered in part by Apple’s (AAPL) better-than-expected quarterly earnings.
Warren Buffett, chairman and CEO of Berkshire Hathaway, in an interview with CNBC’s Squawk Box on Feb. 29, 2016. (Photo by: Lacy O’Toole/CNBC/NBCU Photo Bank/NBCUniversal via Getty Images)
Jobs and average hourly earnings were below expectations, while the unemployment rate inched higher.
“The April jobs report doesn’t create an urgent concern for the labor market or the economy, and it found a way to thread the needle between being soft enough but not too weak,” eToro investment analyst Bret Kenwell had said.
On Monday Bloomberg reported, though, that as bond investors “cautiously increase bets on [Fed interest-rate] policy easing this year, inflation remains sticky and could limit what the Fed can do, which in turn could keep bonds in their recent ranges.”
“Jay Powell was justified in saying that the job market isn’t as tight as it used to be,” said Thierry Wizman, global foreign-exchange and rates strategist at Macquarie. “That’s not because payroll growth slowed, but because wage growth slowed and labor-market turnover has been weak.”
“In view of the strength of immigration inflows, traders should focus away from job growth and toward measures of turnover and wages to gauge the Fed’s disposition,” he said.
Among equities in focus, Berkshire Hathaway Class B shares (BRK.B) were 0.8% higher in the premarket. The group, led by CEO Warren Buffett, on Saturday reported that operating profit rose 39% from a year earlier to $11.2 billion.
Berkshire did cut its stake in tech giant Apple by 13%, building its cash on hand to $189 billion. Bloomberg reported that Buffett nonetheless praised Apple, hinting that tax issues prompted the cut in the holding. Apple shares at last check ticked 0.4% lower in the premarket.
This week investors will be particularly awaiting a number of earnings reports, including, CNBC reported, Palantir after the closing bell on Monday, Walt Disney and Lyft on Tuesday, Uber and Bumble on Wednesday and Warner Bros. Discovery on Thursday.
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