Dow Futures Higher Ahead of November Jobs Report; COVID Hospitalizations Hit Record High

The Friday Market Minute

  • Global stocks near record highs as risk appetite improves amid stimulus talk progress in Washington and expected central bank support.
  • Lawmakers inch closer to a bi-partisan deal that could inject nearly $1 trillion into the U.S. economy, which is now as vulnerable as ever to the deadly resurgence of coronavirus infections.
  • November jobs report shows a fewer-than-expected 245,000 net new jobs were added to the economy, while the headline unemployment rate slipped to 6.7%
  • Oil prices rise as OPEC leaders agree a compromise 500,000 barrel per day tapering of their 7.7 million production cuts following a week of meetings in Vienna.
  • Wall Street futures point to a firmer open after the November jobs report.

U.S. equity held onto early gains Friday following a disappointing reading of the U.S. labor market later that could influence both stimulus talks in Washington and the Federal Reserve’s rate-setting meeting later this month.

The Labor Department’s November non-farm payroll report showed that a fewer-than-expected 245,000 new jobs were added to the economy last month, as service sector hiring, particularly in retail, slowed from the previous months. Mixed data earlier this week — in the form of a weaker-than-expected reading of private sector job growth from ADP and the first decline in three for weekly jobless claims — had added an usual degree of uncertainty to the 8:30 am release and the Street consensus forecast of a gain of 469,000.

However, with COVID infection rising at more than 200,000 per day, California readying stay-at-home orders for the nation’s biggest state and deaths and hospitalizations surging to pandemic era peaks, December hiring, as well as in the early months of next year, is becoming increasingly clouded.

The data will be sharply eyed in both Washington and on Wall Street, as well, as lawmakers look to inch closer to a bi-partisan compromise on stimulus that could see nearly $1 trillion injected into the U.S. economy before the end of the year.

“This is a disappointing report, and one that shows the third wave of the pandemic is having a bigger effect on hiring than had been thought. With the significant drop in private job creation, prospects for a continued strong recovery in consumer spending may be at risk,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “This is a wake up call for the Congress and should support more Federal stimulus.”

Stocks did retreat from a record peak yesterday, however, after a report suggested Pfizer  (PFE) – Get Report might not be able to meet its 2020 forecast for vaccine distribution amid supply-chain issues, although it does expect to produce the anticipated 1.3 billion doses of its messenger-RNA vaccine over the whole of 2021.

Friday’s start to the session looks positive, however, heading into the payroll release, with futures contracts tied to the Dow Jones Industrial Average indicating a 95 point opening bell gain and those linked to the S&P 500 suggesting a 10 point move to the upside.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.11% lower at a two-and-a-half year trough of 90.62 as risk appetite improved and new Congressional spending plans were factored into the U.S. budget deficit. Benchmark 10-year Treasury note yields were little changed at 0.923%

European stocks advanced to a 9-month high in the early Friday session, buoyed by gains on Wall Street this week and gains in energy stocks, which have risen in concert with surging oil prices. Reported progress in Brexit trade talks, which are expected to conclude this weekend, were also lifting benchmark indices around the region, with the Stoxx 600 rising 0.25% in Frankfurt and the FTSE 100 gaining 0.83% in London.

Oil prices were also on the rise following yesterday compromise agreement between OPEC leaders and Russia, which will see the cartel, along with its allies, taper their current output cuts — which are holding back 7.7 million barrels from the market each day — by around 500,000 starting on January 1. 

WTI crude futures contracts for January delivery, the U.S. benchmark, traded 58 cents higher from their Thursday close in New York and were changing hands at $46.22 per barrel in early European dealing, while Brent contracts for February delivery, the new global benchmark, rose 62 cents to $47.33 per barrel.

Asia stocks hit a fresh all-time high in overnight trading, with the MSCI ex-Japan benchmark rising 0.85%, while the Nikkei closed out a record-setting week with a modest 0.22% decline that pegs the index near its twenty nine and a half year high of 26,751.24 points.