Dow Futures Fall 100 Pts; Nonfarm Payrolls Loom Large

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© Reuters Dow Futures Fall 100 Pts; Nonfarm Payrolls Loom Large

By Peter Nurse    

Investing.com — U.S. stocks are seen opening lower Friday, adding to the previous session’s dramatic selloff on concerns a solid April nonfarm payrolls release will add to expectations of aggressive monetary policy tightening.

At 7 AM ET (1100 GMT), the Dow Futures contract was down 100 points, or 0.3%, S&P 500 Futures traded 23 points, or 0.6%, lower and Nasdaq 100 Futures dropped 115 points, or 0.9%.

The three main Wall Street indices slumped Thursday, with the blue chip Dow Jones Industrial Average falling more than 1,000 points, or 3.1%, its worst daily performance since October 2020. 

The tech-heavy Nasdaq Composite fell 5%, its biggest one-day percentage decline since June 2020, as yields on Treasury bonds shot above 3%. 

This meltdown reversed the relief rally following Wednesday’s Federal Reserve meeting, and the volatility suggests the market is grappling with how to price in inflation and slowing growth.

“Base case remains equity lows, yield highs yet to be reached,” Bank of America’s strategists wrote in a note. “‘Recession shock’ was priced-in too quickly; this is a problem as stronger-than-expected economic data in the first half is causing the market to price-in longer/bigger inflation/rates shock.”

With this in mind, investors will focus on the April jobs report, due at 8:30 AM ET (1230 GMT), with an additional 391,000 nonfarm payrolls expected, below the previous 431,000 reading.

However, perhaps the most important numbers in the report will be the participation rate and average hourly earnings.

“An average hourly earnings number in line with consensus (0.4% month-on-month, 5.5% year-on-year) should keep U.S. yields and the dollar firm. Any soft headline employment data will be ascribed to tight labour markets,” said analysts at ING, in a note.

In the corporate sector, Lucid (NASDAQ:LCID) is likely to be in focus after the electric vehicle group posted a narrower loss than expected after the close on Thursday, while Live Nation Entertainment (NYSE:LYV) reported solid profits as the concert and sports business rebounded. 

Tesla (NASDAQ:TSLA) will also be in the spotlight after Reuters reported that the electric car maker is aiming to increase output at its Shanghai plant to 2,600 cars a day from May 16, as it seeks to restore production to levels before the city locked down to control COVID-19.

Earnings are also due from the likes of clothes retailer Under Armour (NYSE:UA) and insurance giant Cigna (NYSE:CI) before the bell.

Oil prices traded higher Friday, on course for a second straight weekly gain, on persistent concerns over the tightness of global supply.

The EU is seeking to remove the biggest stumbling block to its proposed embargo on Russian oil and refined products, offering exemptions to some central European member states, hoping that the concessions will ensure the unanimity needed for the sanctions to come into force.

By 4 AM ET, U.S. crude futures traded 2.1% higher at $110.55 a barrel, while the Brent contract rose 2.2% to $113.29. 

Additionally, gold futures rose 0.5% to $1,884.35/oz, while EUR/USD traded 0.5% higher at 1.0591.