Stock futures rose after data showing a sharp slowdown in U.S. hiring bolstered speculation on further stimulus to revive economic growth as the pandemic ravages the country.
S&P 500 contracts advanced after initially trimming gains as a government report showed that U.S. payrolls dropped 140,000, the first decline since April. Treasuries and the dollar were little changed.
In a week marked by a siege of the U.S. Capitol and Democratic sweep of Congress, all major U.S. equity benchmarks notched records as investors focused on the prospect for more fiscal aid. Democratic victories in Georgia delivering control of the U.S. Senate could result in an additional stimulus package after President-elect Joe Biden takes office on Jan. 20. While economists expect vaccinations will lead to a faster pace of job growth in the second quarter, the intervening months could bring more labor market pain until many more Americans are inoculated.
“It’s hard to ignore the staggering drop in jobs from December, but if past is prologue, the market is poised to shrug off the disappointing data in the face of the vaccine rollout, strong likelihood of stimulus, and an accommodative Fed,”said Mike Loewengart, managing director of investment strategy at E*Trade Financial. “Despite a stagnating labor market, investors are looking ahead, and at least when it comes to the market the future appears bright.”
The Russell 2000 Index of small caps is heading toward its best week against the S&P 500 since April. “Technically, the group is near-term overbought,” said Chris Harvey, head of equity strategy at Wells Fargo Securities. “Intermediate term, valuation is attractive and we think it’ll be a good earnings season for Russell 2000 stocks.”
Elsewhere, Brent crude traded near $55 a barrel as gains in broader markets added to investor optimism already buoyed by Saudi Arabia’s unilateral plan to cut output. Bitcoin jumped to another record on Friday, with prices approaching $42,000.
These are some of the main moves in markets:
- Futures on the S&P 500 gained 0.4% as of 9:16 a.m. New York time.
- The Stoxx Europe 600 Index advanced 0.6%.
- The MSCI Asia Pacific Index gained 1.7%.
- The Bloomberg Dollar Spot Index fell 0.1%.
- The euro decreased 0.1% to $1.2254.
- The Japanese yen was unchanged at 103.81 per dollar.
- The yield on 10-year Treasuries climbed one basis point to 1.09%.
- Germany’s 10-year yield declined less than one basis point to -0.52%.
- Britain’s 10-year yield advanced one basis point to 0.291%.
- West Texas Intermediate crude gained 1.4% to $51.53 a barrel.
- Gold depreciated 1.9% to $1,878.28 an ounce.
— With assistance by Sunil Jagtiani, Cormac Mullen, Yakob Peterseil, Robert Brand, Nancy Moran, Sophie Caronello, and Elena Popina