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Jobs Data Sparks US Futures to Climb and Dollar Gains

By John Viljoen

US stock futures rose as a slowdown in hourly wage growth outweighed an otherwise robust hiring report.

Contracts on the S&P 500 and the Nasdaq 100 rose, even after nonfarm payrolls increased 223,000 last month, surpassing estimates. The unemployment rate came in at 3.5%. The dollar gained. 

A person looks at stock prices displayed inside the trading gallery of the RHB Investment Bank Bhd. headquarters in Kuala Lumpur, Malaysia, on Tuesday, Oct. 11, 2022. Malaysia’s stocks and the ringgit weakened after Prime Minister Ismail Sabri Yaakob announced the dissolution of parliament on Monday, paving the way for elections this year. Photographer: Samsul Said/Bloomberg

Softening in the labor market remains a goal for the Federal Reserve as it battles inflation. Average hourly earnings rose 0.3% from a month earlier and 4.6% from December 2021 after a downward revision to November, which was good news for the markets. 

The report comes after payrolls figures on Thursday surpassed estimates and a surprise drop in new claims for unemployment benefits also underscored a resilient jobs market.

Market pricing for US interest rates to peak in June rose to above 5% following comments from Atlanta Fed President Raphael Bostic, who said the central bank still has “much work to do” to tame inflation. St. Louis Fed President James Bullard, who is no longer a voting member of the Federal Open Market Committee, said rates were approaching a sufficiently restrictive zone and that inflation expectations had retreated, offering investors some optimism.

At the same time, investors have responded to stubborn inflation and the threat of recession by starting the new year with a flight to cash from equities, according to strategists at Barclays Plc. Inflows into money market funds were at $112 billion for the week through Jan. 4, according to a research note citing EPFR Global. That’s the most since April 2020, when the pandemic was spreading globally. 

Meanwhile, Citigroup Inc. strategists said European stocks are better prepared than their pricey US peers for a slide in earnings that’s set to take place this year. A team led by Robert Buckland raised European equities to overweight on Friday, saying valuations already discount a 15% drop in earnings. At the same time, they cut US shares to underweight on the grounds that earnings expectations are still too optimistic.

Elsewhere, oil headed for a large weekly loss as demand concerns continue to hang over the market. Gold steadied after retreating Thursday from a six-month high reached earlier in the week.

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.4% as of 8:36 a.m. New York time
  • Nasdaq 100 futures rose 0.3%
  • Futures on the Dow Jones Industrial Average were little changed
  • The Stoxx Europe 600 rose 0.1%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0516
  • The British pound fell 0.2% to $1.1884
  • The Japanese yen fell 0.4% to 133.95 per dollar

Cryptocurrencies

  • Bitcoin fell 0.5% to $16,765.12
  • Ether fell 0.5% to $1,245.76

Bonds

  • The yield on 10-year Treasuries advanced one basis point to 3.73%
  • Germany’s 10-year yield declined two basis points to 2.29%
  • Britain’s 10-year yield advanced one basis point to 3.56%

Commodities

  • West Texas Intermediate crude fell 0.2% to $73.52 a barrel
  • Gold futures were little changed

This story was produced with the assistance of Bloomberg Automation.

More stories like this are available on bloomberg.com

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