S&P Futures Climb as Oil Falls, Key U.S. Jobs Report in Focus

December S&P 500 E-Mini futures (ESZ26) are up +0.43% this morning as a retreat in oil prices lifted sentiment ahead of the release of the key U.S. jobs report.

The price of WTI crude slid nearly -4% after Reuters reported that European Union members discussed a French proposal on Friday to release crude and fuel reserves. Treasuries edged higher as lower oil prices moderated inflation concerns and elevated yields drew investor demand. The 10-year T-note yield fell one basis point to 5.23%.

In yesterday’s trading session, Wall Street’s major indices closed higher, supported by a retreat in Treasury yields from multi-decade highs. Accenture (ACN) jumped over +15% and was the top percentage gainer in the S&P 500 after the consulting company posted better-than-expected FQ4 results. Also, Synopsys (SNPS) surged more than +12% and was the top percentage gainer in the Nasdaq 100 after the company announced separate deals with OpenAI and Amazon and lifted its long-term financial targets. In addition, Micron Technology (MU) rose more than +3% to lead chipmakers higher after the company reported stronger-than-expected FQ4 results and issued upbeat FQ1 guidance. On the bearish side, Corteva (CTVA) tumbled over -83% following the planned spin-off of its Crop Protection business into a standalone publicly traded company, Vylor.

Economic data released on Thursday pointed to a solid labor market and continued economic resilience. The number of Americans filing initial jobless claims in the past week unexpectedly fell by 1K to a 10-week low of 197K, compared with expectations of 201K. Also, the U.S. ISM manufacturing index dipped to 54.5 in September, below expectations for an increase to 54.8, but remained in expansion territory for a ninth consecutive month. In addition, U.S. August construction spending unexpectedly jumped +0.9% m/m, stronger than expectations of no change m/m.

Investors also digested the latest comments from Fed officials. Fed Vice Chair Philip Jefferson said on Thursday that policymakers may need more time before determining whether to raise interest rates again. “As we look ahead, my view is that any future adjustments in policy should be determined by carefully examining trends in the data, the evolving outlook, and the balance of risks,” Jefferson said. Also, Minneapolis Fed President Neel Kashkari said it remains unclear how high interest rates will need to rise to cool prices, adding that the central bank must tackle inflation after five years of supply shocks. In addition, Richmond Fed President Tom Barkin, Boston Fed President Susan Collins, and Kansas City Fed President Jeff Schmid said during a panel discussion that a broadly stable economy gives the central bank greater scope to focus on inflation rather than employment.

U.S. rate futures are currently pricing in a 76.2% chance of no rate change and a 23.8% chance of a 25-basis-point rate hike at October’s monetary policy meeting.

Today, all eyes are on the U.S. nonfarm payrolls report, which is set to be released in a couple of hours. Economists estimate that September nonfarm payrolls will rise by 89K after a much stronger-than-expected 162K gain in August, the biggest increase since March.

Investors will also focus on the U.S. unemployment rate. Economists anticipate that the jobless rate will remain steady at 4.1% in September.

U.S. average hourly earnings data will be released today. Economists expect average hourly earnings to rise +0.3% m/m and +3.2% y/y in September, compared with +0.3% m/m and +3.1% y/y in August.

A survey conducted by 22V Research showed that 53% of investors expect the market reaction to the jobs report to be “mixed/negligible,” 41% anticipate a “risk-on” response, and only 6% foresee a “risk-off” reaction.

U.S. factory orders data will be released today as well. Economists project August factory orders to rise +0.1% m/m after a +0.9% m/m gain in July.

In addition, market participants will be watching for a speech from Dallas Fed President Lorie Logan.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 5.23%, down -0.17%.

The Euro Stoxx 50 Index is up +1.11% this morning as lower oil prices and bond yields boosted sentiment. Chip-related stocks rallied on Friday as investor enthusiasm for AI-linked shares continued to build following strong quarterly results and guidance from memory-chip maker Micron Technology earlier in the week. Construction and industrial stocks also climbed. Despite Friday’s gains, the benchmark index was on track for a weekly loss. Preliminary data from Eurostat released on Friday showed that the Eurozone’s annual inflation rate rose to its highest level in three years in September, driven by rising energy prices. Meanwhile, European Central Bank Governing Council member Olli Rehn said that energy prices are nearing the central bank’s “adverse” scenario, but surging long-term borrowing costs limit how much of the resulting inflation can feed through to the broader economy. Eurozone government bond yields fell sharply on Friday, reversing the previous day’s surge as elevated yields lured investors back into the debt market. Attention now turns to the key U.S. jobs report due later in the day. In corporate news, IG Group Holdings (IGG.LN) tumbled over -23% after the online trading platform cut its full-year revenue growth guidance.

Eurozone’s CPI and Core CPI (preliminary) were released today.

Eurozone’s September CPI rose +3.8% y/y, stronger than expectations of +3.7% y/y.

Eurozone’s September Core CPI rose +2.5% y/y, in line with expectations.

Japan’s Nikkei 225 Stock Index (NIK) closed down -0.94%, while mainland China’s financial markets were closed for a holiday.

Japan’s Nikkei 225 Stock Index closed lower today as investors took profits following a strong two-session rally. Real estate, healthcare, and financial stocks led the declines on Friday. Still, the benchmark index gained 2.9% for the week, marking its third straight weekly advance. Data released on Friday showed that Tokyo’s annual core inflation picked up in September to its fastest pace in 10 months as the impact of some temporary government measures faded, supporting the Bank of Japan’s case for further interest-rate hikes. Meanwhile, Japanese government bond yields were mixed on Friday, with longer-term yields continuing to rise amid persistent inflation concerns. Economy Minister Minoru Kiuchi said on Friday that Japan is no longer in deflation and therefore no longer needs an excessively loose monetary policy aimed at achieving a higher inflation rate. Elsewhere, T. Rowe Price’s David Clewell said in a note that Japanese equities look attractive, especially with the dollar trading above 152 yen, a level that could drive upward earnings revisions for Japanese exporters. In corporate news, Rakuten Group fell over -2% after Jefferies lowered its price target on the stock to 775 yen from 1,000 yen, citing a likely temporary slowdown in subscriber growth at its mobile unit and the risk of near-term network quality disruptions. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -1.48% at 22.58.

The Japanese September Tokyo Core CPI rose +2.7% y/y, stronger than expectations of +2.4% y/y.

The Japanese August Unemployment Rate was 2.5%, weaker than expectations of no change at 2.4%.

China’s Shanghai Composite Index was closed today for the week-long National Day holiday. Mainland China’s financial markets will reopen on Thursday, October 8th.

Pre-Market U.S. Stock Movers

Nike (NKE) slumped over -10% in pre-market trading after the sportswear giant reported weaker-than-expected FQ1 sales and warned that its sales downturn is set to worsen this fiscal year.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - October 2nd

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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.