Stock index futures are trading cautiously Friday with direction at the open almost sure to be dictated by the June jobs report.
S&P futures (SPX) -0.1%, Dow futures (INDU) +0.1% and Nasdaq 100 futures (NDX:IND) -0.2% are little changed.
In “an exhausting week, and in spite of a march of bad news, the S&P 500 has for now successfully climbed a July wall of worry to be up every day so far with the first four consecutive day increase since late March,” Deutsche Bank’s Jim Reid said.
The 10-year Treasury yield is down 2 basis points to 2.99% and the 2-year is down 4 basis points to 3.00%.
“Amid broader risk sentiment taking a breather from recession chatter the 10Y US Treasury yield has climbed back to 3%,” ING said. “Today’s jobs data is key to keeping that trajectory, though the curve could still tend flatter.”
Economists expect that nonfarm payrolls rose by about 270K last month, down from a 390K gain in May. The unemployment rate is seen steady at 3.6%, with average hourly earnings up 0.3%.
A “200K increase in private payrolls would be a decent month in a regular cycle, so the slowing in job gains is hardly disastrous, and the numbers are miles away from anything recessionary,” Pantheon Macro’s Ian Shepherdson wrote. “Whether they will stay that way, though, depends on the strength of final demand.”
“The rebound in prime-age participation since last fall likely explains some, or even all, the downshift in wage growth, so a further increase over the next few months would be a positive development, from an inflation fighting perspective.”
A very weak jobs number could have traders rethinking how determined the Fed will be on fighting inflation. For now, recession concerns look to be on the back burner.
“Market expectations for a larger 75bp move at the July meeting have already firmed again after the FOMC minutes earlier this week and following the hawkish remarks by the Fed’s Waller and Bullard yesterday, who both advocated such a larger move,” ING said.
Among active stocks, Twitter is down in premarket trading on a report that Elon Musk’s takeover bid is in jeopardy.
Read More: S&P, Dow, Nasdaq futures hesitant, yields dip ahead of payrolls