Friday September 4th


Dow Futures briefly falls 200 points after data

U.S. stock index futures pointed to a sharply lower open on Friday as traders digested nonfarm payrolls—one of the most significant data releases of the summer for its implications on the timing of the first rate hike since 2006. Dow futures fell more than 250 points after initially trading in a range in the minutes after the report showed that 173,000 jobs were created, missing expectations of 220,000. The unemployment fell more than expected to 5.1 percent, while average hourly wages increased more than expected by 0.3 percent. Strategists said a decline in unemployment and an increase in wages could support the Fed's case for a rise in rates. The dollar pared losses to turn positive, with the euro briefly below $1.11. The 2-year yield turned higher after traders digested the report, rising to 0.72 percent from 0.68 percent earlier. The 10-year yield traded near 2.16 percent, up from 2.12 percent earlier. Before the 8:30 a.m., ET, release, Dow futures held about 140 points lower after earlier slipping more than 170 points. The data is the final read on monthly labor conditions before the Federal Reserve makes a decision on interest rates at its next policy meeting in about two weeks. U.S. stocks closed narrowly mixed Thursday, giving back sharp opening gains, as investors turned cautious ahead of the Friday morning report. As well as factoring in the health of the U.S. economy, Fed policymakers have said they are also watching the impact of recent market volatility triggered by concerns over the economy in China. Just prior to the release, Richmond Federal Reserve President Jeffrey Lacker—a known hawk—said at a breakfast the labor market no longer warrants zero rates. In a Reuters report he added that it is unlikely a weak unemployment report today would materially alter the labor picture or monetary policy outlook and that the biggest argument in favor of hiking rests on strengthening consumer spending. In Europe, markets held sharply lower Friday, after the jobs report, with all major bourses down in excess of 1.5 percent. Investors temporarily dismissed dovish comments from European Central Bank President Mario Draghi on Thursday. Europe's declines mimicked Asian stock markets, which also moved lower on Friday as investors awaited the all-important jobs numbers. Mainland Chinese markets remained closed for a four-day weekend to commemorate the end of World War Two in Asia-Pacific. Nikkei skids 2.2%. Japan's benchmark Nikkei 225 index clawed back some losses in the final hour of trading to finish at its lowest level since August 26. Oil prices remained fell on Friday after U.S. government data showed the country added fewer jobs than expected in August. Brent crude for October was down 11 cents a barrel at $50.57 by 8:44 a.m. EDT (1244 GMT), after briefly turning positive before the jobs report and having touched an intraday low of $49.68. U.S. crude was down 7 cents at $46.68 a barrel. Gold reversed its gains on Friday after U.S. jobs data came in lower than expected, supporting the theory that the Federal Reserve might hold off on a rate hike in September. Spot gold was down 0.2 percent at $1,122.40 an ounce, after losing over 1 percent in the last two sessions. while U.S. gold for December delivery was down 0.2 percent at $1,121.50.