Friday December 4th


Futures pare gains, Dow futures turn negative after jobs report; oil eyed

U.S. stock index futures indicated a higher open as traders eyed Friday's jobs report that showed creation of 211,000 jobs in November and a rise in hourly wages. "The Fed goes in December but the path is shallow and you couldn't ask for anything more. It's almost like the Fed did this report themselves, but I know they didn't," said John Canally, investment strategist and economist at LPL Financial. The unemployment rate was 5.0 percent, while average hourly earnings rose 0.16 percent in November. October's figure was revised higher to 298,000 from 271,000 and the September figure was revised to 145,000 from 137,000. Treasury yields traded mixed, with the 2-year yield flat after briefly climbing near 0.97 percent and the 10-year yield off session highs at 2.33 percent as of 8:47 a.m., ET. The U.S. dollar index ticked higher to hold above 98 while the euro traded below $1.09. U.S. stock index futures edged higher, holding earlier gains after the data. The report is one of the most anticipated employment reports of the year, as it is the most important data the Fed will see before it meets on Dec. 15 and 16 to consider its first rate hike in nine years. Economists expected 200,000 nonfarm payrolls and an unchanged unemployment rate of 5 percent. They also estimated a 0.2 percent rise in average hourly wages, after a surprise jump of 0.4 percent in October. Markets have been fretting that some U.S. data, like ISM manufacturing, looks a little too weak in a rate-hiking environment. Nevertheless, the market is pricing in a first rate hike and expects it to happen on Dec. 16. On the earnings front, Big Lots and Hovnanian were among those expected before the bell. In Asia the Shanghai Composite closed 1.66 percent lower while Japan's Nikkei finished 2.18 percent lower. In Europe, the pan-European Stoxx 600 index was around 0.42 percent lower. Crude futures turned negative on Friday after OPEC announced it would keep oil output steady, extending a policy that accelerated a commodity price collapse one year ago and has kept markets swimming in roughly 1.5 million barrels of oversupply. The decision keeps OPEC's target production unchanged at 31.5 million barrels per day. "More oversupply, more glut, and lower prices. They've chosen not to address the situation,'' Again Capital founding partner John Kilduff said. Internationally traded Brent was down 44 cents at $43.40 at 8:55 a.m. EDT (1351 GMT), having fallen earlier this week to a low of $42.43, within cents of August's 6-1/2 year trough. U.S. crude was trading down 64 cents at $40.44 per barrel. Gold edged higher on Friday as the dollar rebounded and after an eagerly awaited U.S. non-farm payrolls report. On Thursday it rallied nearly 1 percent after monetary easing measures from the European Central Bank fell short of expectations, boosting the euro and sending the dollar to its lowest in a month. Spot gold was up 0.5 percent at $1,067.50 an ounce.