Wall Street opens in the green despite jobs data miss

Wall Street has made a positive start to Friday’s session despite the latest batch of non-farm payrolls data falling short of expectations.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.43% at 34,724 while the S&P 500 climbed 0.55% to 4,216 and the Nasdaq rose 0.75% to 13,716.

The higher start came after the latest jobs data reported that the US economy added 559,000 jobs in May, up from 278,000 in April but below the 675,000 predicted by analysts. The unemployment rate, meanwhile, fell to 5.8% from 6.1% the month before.

Economists at Capital Economics said despite the improvement, the level of employment is still 7.6mln below its pre-pandemic peak and it would take more than 12 months at that pace to fully eradicate the shortfall.

“Only a few months ago we had expected to see several months’ worth of gains north of one million as the economy reopened, but labour supply is bouncing back much more slowly than demand,” said chief US economist Paul Ashworth.

“Not surprisingly, the biggest gains last month came in the sectors worst affected during the pandemic. the reopening of high-contact services and schools generated a 292,000 gain in leisure & hospitality and a 144,000 gain in public and private education,” he added.

“But employment in those sectors is still roughly 2.5mln and 1.0mln respectively below pre-pandemic levels. Otherwise, manufacturing employment increased by 23,000, led by a 25,000 rebound in motor vehicle manufacturing, which suggests the impact of semiconductor supply shortages eased a little in May.”

7:40am: Wall Street to start lower

The main indices on Wall Street are expected to open slightly lower on Friday ahead of the hotly anticipated US jobs data.

The Dow Jones is expected to shed 70 points to 34,497 at open, with the S&P 500 down 4 points to 4,187 and the Nasdaq down 12 points to 13,516.

Consensus sets 650,000 new jobs in May, with unemployment down to 5.9% from 6.1%.

Last month’s figures missed expectations, with only 266,000 jobs added, so May’s reading will help determine whether the weak April print was a one-off or the start of a new trend, analysts say.

“The ADP private payroll report, initial jobless claims and the employment subcomponent in the ISM services PMI all point to a stellar report,” noted Sophie Griffiths at OANDA.

“A strong labour market, combined with elevated inflation, could prompt the Fed to start tapering support to the economy, a concern that dragged stocks lower in the previous session. With this in mind, a better-than-expected jobs report could drive equities lower, particularly high-growth tech stocks, which are more sensitive to interest rate expectations.”

Four things to watch for on Friday:

• Firms reporting earnings today include real estate investment group Urstadt Biddle Properties Inc (NYSE:UBA), home furnishings firm Hooker Furniture Corp (NASDAQ:HOFT) and Floridian mobile home maker Nobility Homes Inc (OTCMKTS:NOBH)
• Crypto markets are back in focus following more Twitter antics from Elon Musk which has caused Bitcoin prices to wobble
• Also in the spotlight is Dogecoin after the meme-inspired crypto was opened up to retail traders on Coinbase Global Inc’s (NASDAQ:COIN) website and app
• On the macro front, aside from the non-farm payrolls, there will also be factory orders and a speech from Fed chair Jerome Powell to hold market attention

Story by ProactiveInvestors