U.S. stock futures indicate Wall Street extends selling

U.S. stock futures climb on strong jobs report

US stock futures erased their losses after the April jobs report showed another strong month for job gains.

Futures linked to the Dow Jones Industrial Average rose 0.2%, a day after the blue-chip index fell more than 1,000 points, its worst day since 2020. S&P 500 futures rose edged up 0.1% while tech-heavy Nasdaq-100 futures gained 0.2%.

Futures were down around 0.4% before the data was released.

The economy created 428,000 jobs in April and the unemployment rate remained unchanged at 3.6%. Economists polled by the Wall Street Journal predicted that 400,000 jobs were created in April and the unemployment rate fell to 3.5% – where it stood just before the pandemic and a five-decade low – against 3.6%.

Stocks have been skewed in recent days as investors tried to gauge the impact the Federal Reserve’s plan to raise interest rates will have on the economy. Investors are caught between competing hopes: that rate hikes will be large enough to rein in rapidly rising inflation, but not so large as to derail economic growth.

“The market is trying to figure out whether central banks are more concerned about inflation or about slowing growth and the market has clearly decided that they are more concerned about inflation,” said Altaf Kassam, head of the investment strategy for Europe, Middle East and Africa at State Street Global Advisors. “If the Fed is going to fight inflation at all costs, that will definitely have an impact on stocks.”

Ahead of the opening bell, DoorDash rose nearly 7% after the food delivery company reported an increase in quarterly revenue Thursday night. DraftKings also rose nearly 7% after raising its forecast for the year.

US stocks rallied on Wednesday after the Federal Reserve raised interest rates by half a percentage point, buoyed by relief that it was not actively considering even bigger increases in the future, but that relief faded on Thursday as investors reassessed the outlook for stocks.

Federal Reserve Chairman Jerome Powell said on Wednesday the central bank had approved a half-percentage-point hike in interest rates in a bid to curb inflation that is at an all-time high for four decades. Photo: Win McNamee/Getty Images

Valuations in U.S. markets have “gone from rich to very rich” over the past 10 years as stock prices have risen more than earnings, said Frank Benzimra, head of Asian equity strategy at Societe Generale. But as interest rates rise, the value investors place on companies’ future cash flows declines, he said.

In bond markets, the yield on the benchmark 10-year U.S. Treasury rose to 3.090% from 3.066% on Thursday, marking its highest level since November 2018. Bond yields rise as prices fall.

One of the reasons for volatile market swings: Investors lack an obvious safe haven as bonds and gold have come under pressure from rising interest rates.

“To deal with this volatility you need a buffer, but fixed income is no longer the buffer it used to be,” Kassam said.

Brent, the global oil benchmark, rose 1.8% to $112.87 a barrel, extending a recent streak of gains driven by expectations that the European Union was set to ban imports of Russian oil in response to its invasion of Ukraine. The price of gold edged up 0.4%

Bitcoin fell 1.6% to $35,854, after falling more than 8% on Thursday as the market selloff prompted investors to abandon risky bets such as cryptocurrencies.

Japanese stocks bucked the broader downtrend as the Tokyo market reopened after a three-day holiday.


Photo:

kazuhiro nogi/Agence France-Presse/Getty Images

Overseas, benchmarks in Asia and Europe fell, following losses in the United States, the steepest declines for the tech-heavy Hang Seng index, which fell 3.8%. In mainland China, the Shanghai Composite Index fell 2.2%. In Europe, the pancontinental Stoxx Europe 600 index fell 1.5%.

British Airways owner International Consolidated Airlines Group fell more than 6% after reporting a first-quarter operating loss. Adidas fell more than 4% after warning that its sales in China would fall.

Japanese stocks bucked the broader downtrend as the Tokyo market reopened after a three-day holiday, with the Nikkei 225 gaining 0.7%.

Write to Will Horner at William.Horner@wsj.com and Rebecca Feng at rebecca.feng@wsj.com

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