S&P Futures Climb as Investors Await Key U.S. Jobs Report

December S&P 500 futures (ESZ23) are trending up +0.25% this morning as market participants looked ahead to the crucial monthly U.S. nonfarm payrolls report for clues on the Federal Reserve’s interest rate path.

In Thursday’s trading session, Wall Street’s major indices closed in the red. Rivian Automotive Inc (RIVN) tumbled over -22% after the EV maker said it intends to offer $1.5 billion of green convertible senior notes due 2030. Also, beverage stocks retreated, with PepsiCo Inc (PEP) falling more than -5% and Coca-Cola Co (KO) dropping over -4%. In addition, Clorox Co (CLX) plunged more than -5% following the announcement that a cybersecurity attack, which it had revealed in September, would have a significant impact on the company’s Q1 results. On the bullish side, Lamb Weston Holdings Inc (LW) climbed about +8% and was the top percentage gainer on the benchmark S&P 500 after the frozen potato giant reported upbeat Q1 results and raised its FY24 guidance.

The Labor Department’s report on Thursday showed claims for state unemployment benefits rose moderately to 207K last week, stronger than expectations of 210K. Also, the U.S. August trade deficit narrowed to a 3-year low of -$58.30 billion, stronger than expectations of -$62.30 billion. 

“For now, labor market conditions are still easing without a significant rise in unemployment. Fed officials will need to see further softening in the September employment report and beyond to prevent them from raising rates one more time this year,” said Michael Pearce, lead U.S. economist at Oxford Economics.

Meanwhile, San Francisco Fed President Mary Daly said Thursday that should the labor market and inflation continue to show signs of slowing, or if financial conditions remain tight, policymakers could hold interest rates steady. “Importantly, even if we hold rates where they are today, the policy will grow increasingly restrictive as inflation and inflation expectations fall,” Daly said.

U.S. rate futures have priced in an 18.5% probability of a 25 basis point rate hike at the November FOMC meeting and a 31.9% chance of a 25 basis point rate increase at the conclusion of the Fed’s December meeting.

Today, all eyes are focused on U.S. Nonfarm Payrolls data in a couple of hours. Economists, on average, forecast that September Nonfarm Payrolls will come in at 170K, compared to the previous value of 187K.

Also, investors will likely focus on U.S. Private Nonfarm Payrolls data, which stood at 179K in August. Economists foresee the new figure to be 160K.

U.S. Average Hourly Earnings data will also be closely watched today. Economists expect September’s figures to be +0.3% m/m and +4.3% y/y, compared to the previous numbers of +0.2% m/m and +4.3% y/y.

U.S. Unemployment Rate will be reported today as well. Economists foresee this figure to stand at 3.7% in September, compared to the previous value of 3.8%.

In the bond markets, United States 10-year rates are at 4.734%, up +0.42%.

The Euro Stoxx 50 futures are up +0.85% this morning as investors geared up for a U.S. payrolls report. Gains in insurance stocks are leading the overall market higher. Also, mining stocks gained ground after news that a Chinese iron-ore buying agency was in talks with international suppliers. The Federal Statistics Office said Friday that German manufacturing orders rose more than expected in August, primarily driven by a robust increase in the computer, electronic, and optical products sector. Meanwhile, Goldman Sachs anticipates a rebound of economic growth in the euro area, projecting it to reach 1.25%-1.50% in 2024, which is more than twice their forecast of about 0.5% for this year’s growth. In corporate news, Adyen (ADYEN.NA) rose over +3% after TD Cowen initiated coverage of the stock with a Market Perform rating.

U.K.’s Halifax House Price Index and Germany’s Factory Orders data were released today.

U.K. September Halifax House Price Index has been reported at -0.4% m/m, stronger than expectations of -0.8% m/m.

The German August Factory Orders stood at +3.9% m/m, stronger than expectations of +1.8% m/m.

Japan’s Nikkei 225 Stock Index (NIK) closed down -0.26%, while the Chinese market was closed for the week-long Golden Week holidays. 

Japan’s Nikkei 225 Stock Index closed slightly lower today as investors hesitated to make big bets ahead of key U.S. jobs data. Losses in energy and technology stocks led the overall market lower. Government data showed on Friday that Japanese household spending fell in August from a year earlier, marking the sixth consecutive month of decreases. Meanwhile, Kazuo Momma, a former Bank of Japan official who now serves as an executive economist at Mizuho Research & Technologies, said that Bank of Japan board members would likely discuss whether to tweak forward guidance and yield curve control during their meeting this month. In corporate news, Monex Group climbed over +2% after surging to its daily upper limit in the previous session, as the online brokerage firm entered into a capital alliance with mobile phone operator NTT Docomo. On the negative side, Onward Holdings plunged more than -5% even after the apparel group boosted its full-year profit guidance and raised dividend payouts. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.78% to 20.47.

The Japanese August Household Spending came in at +3.9% m/m and -2.5% y/y, stronger than expectations of +0.9% m/m and -4.3% y/y.

Pre-Market U.S. Stock Movers

Tesla Inc (TSLA) fell over -1% in pre-market trading after the company cut prices of its Model 3 and Model Y vehicles in the U.S. by about 2.7% to 4.2%.

Pioneer Natural Resources Co (PXD) soared about +11% in pre-market trading after the Wall Street Journal reported that Exxon Mobil was nearing a deal to acquire the company for about $60 billion.

AMC Entertainment Holdings Inc (AMC) rose more than +2% in pre-market trading after the company said Taylor Swift’s Eras Tour concert film had crossed $100 million in global advance ticket sales.

The AES Corporation (AES) dropped about -1% in pre-market trading after UBS downgraded the stock to Neutral from Buy.

ELF Beauty Inc (ELF) gained more than +2% in pre-market trading after Jefferies upgraded the stock to Buy from Hold.

Levi Strauss & Co (LEVI) slid over -1% in pre-market trading after the apparel seller reported downbeat Q3 results and lowered its FY23 revenue growth forecast.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - October 6th

Lifecore Biomedical (LFCR), Trilogy Metals (TMQ), Rite Aid (RAD).

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