### Stronger-Than-Expected Jobs Data May Impact Wall Street
The major U.S. index futures are indicating a lower open on Friday, with stocks poised to move downward after the previous session ended with little change.
Futures declined following the release of a closely-watched Labor Department report showing significantly stronger-than-expected job growth for May. According to the report, non-farm payroll employment surged by 272,000 jobs in May, following a downwardly revised gain of 165,000 jobs in April. Economists had anticipated an increase of approximately 185,000 jobs, compared to the initially reported 175,000 jobs for the previous month.
The report also revealed that the unemployment rate edged up to 4.0 percent in May from 3.9 percent in April, contrary to expectations that it would remain unchanged.
While this data alleviates recent concerns about the strength of the U.S. economy, it may dampen the current optimism regarding interest rate prospects. In response, Treasury yields have surged, with the ten-year yield rebounding from its lowest levels in over two months.
Following Wednesday's rally, which saw the Nasdaq and S&P 500 reach record closing highs, Thursday's trading session was relatively lackluster. The major averages fluctuated around the unchanged line before closing slightly mixed. The Dow rose by 78.84 points, or 0.2 percent, to 38,886.17; the Nasdaq fell by 14.78 points, or 0.1 percent, to 17,173.12; and the S&P 500 edged down by 1.07 points, or less than a tenth of a percent, to 5,352.96.
This choppy trading suggests that traders are reassessing the market outlook following Wednesday's surge while waiting for the Labor Department's detailed jobs report.
A day before the release of the monthly jobs report, the Labor Department reported that first-time claims for U.S. unemployment benefits rose more than anticipated for the week ending June 1st. Initial jobless claims climbed to 229,000, an increase of 8,000 from the previous week's revised level of 221,000. Economists had expected claims to inch up to 220,000 from the initially reported 219,000.
Meanwhile, the Commerce Department reported that the U.S. trade deficit widened significantly in April. The trade deficit surged to $74.6 billion from a downwardly revised $68.6 billion in March. Economists had expected the deficit to widen to $76.1 billion from a previously reported $69.4 billion. Despite missing expectations, the April trade deficit was the largest since October 2022's $75.3 billion.
While most major sectors showed only modest moves, gold stocks saw significant gains, driving the NYSE Arca Gold Bugs Index up by 3.5 percent, fueled by a rise in gold prices. Conversely, housing stocks faced pressure, resulting in a 1.2 percent decline in the Philadelphia Housing Sector Index. Airline stocks also moved notably downward, with the NYSE Arca Airline Index falling by 1.2 percent.
### Commodity and Currency Markets
Crude oil futures are rising, up $0.30 to $75.85 a barrel after surging $1.48 to $75.55 a barrel on Thursday. Gold futures, after climbing $15.40 to $2,390.90 an ounce in the previous session, are plunging $53.10 to $2,337.80 an ounce.
In currency markets, the U.S. dollar is trading at 156.67 yen versus 155.61 yen at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0833 compared to yesterday's $1.0890.
### Asia
Asian stocks ended mixed on Friday but managed to snap a two-week losing streak following interest rate cuts by the European Central Bank and the Bank of Canada. Sluggish U.S. economic data fueled hopes for rate cuts by the Federal Reserve, while China reported mixed trade data. U.S. Treasuries remained relatively unchanged, and the dollar held near an eight-week low against a basket of currencies, ahead of key U.S. jobs data expected later in the day, which could influence the Fed's rate policy.### Market Overview
Gold prices have remained stable, hovering near a two-week high, and are poised for their first weekly gain in three weeks. Meanwhile, oil prices have seen little change following two days of increases, as OPEC ministers indicated that the cartel might adjust its oil supply agreement if necessary.
### Asian Markets
China's Shanghai Composite Index saw a slight increase, closing at 3,051.28 after mixed trade data was released. In contrast, Hong Kong's Hang Seng Index fell by 0.6 percent, ending the day at 18,366.95.
Chinese exports grew annually by 7.6 percent, a notable rise from April's 1.5 percent increase, as reported by the Customs Administration. This exceeded analysts' forecasts of 6.0 percent growth. However, import growth decelerated to 1.8 percent, compared to 8.4 percent the previous month.
In Japan, markets closed marginally lower amid speculation that the Bank of Japan might hint at a bond tapering plan in its upcoming meeting. Despite Japanese household spending rising for the first time in 14 months, consumers remained cautious due to higher prices. Mitsubishi UFJ Financial Group dropped by 1.7 percent, while Sumitomo Mitsui Financial Group saw a slight uptick. Both companies plan to divest approximately 1.32 trillion yen ($8.5 billion) worth of strategic shareholdings in Toyota Motor Corp, whose shares declined by 1.7 percent.
South Korean stocks rallied, with the Kospi jumping 1.2 percent to 2,722.67 amidst rising hopes of U.S. rate cuts. Despite the overall positive movement, heavyweight Samsung Electronics ended slightly lower as the company's largest union in South Korea went on strike for the first time in its 55-year history.
In Australia, stocks made modest gains led by gold miners. Resolute Mining, St Barbara, and Regis Resources surged by 4-7 percent due to increasing bullion prices driven by hopes of Fed rate cuts. The benchmark S&P/ASX 200 Index rose 0.5 percent to 7,860, with the broader All Ordinaries Index also gaining 0.5 percent to close at 8,112.80.
New Zealand's benchmark S&P/NZX-50 Index, however, ended the day down by 1.0 percent at 11,856.56.
### European Markets
European stocks mostly declined on Friday, with selling pressure intensifying following the release of U.S. jobs data. The U.K.'s FTSE 100 Index dropped by 0.7 percent, while the German DAX Index and the French CAC 40 Index both fell by 1.0 percent.
Eurostat’s third estimate showed that the Eurozone economy grew by 0.3 percent in the first quarter compared to the previous quarter, aligning with consensus expectations. In France, the trade deficit widened in April due to increased imports and decreased exports. Separate reports indicated that both German export and import growth accelerated in April, although German industrial production declined at a slower rate, according to Destatis.
The Confederation of British Industry revised its growth forecasts for the U.K., predicting a 1 percent growth in 2024 and 1.9 percent in 2025, driven by anticipated increases in consumer spending. The U.K. housing market remained relatively stable, with a marginal decrease in house prices in May, as reported by mortgage lender Halifax.
### Corporate News
Among notable corporate movements, Swiss banking software company Temenos saw an upward shift in its share price following news of a share buyback. Conversely, shares of C&C Group plummeted in London after CEO Patrick McMahon stepped down due to accounting errors. Homebuilder Bellway's shares climbed after the company raised its annual average selling price forecast. In Paris, Rexel Group shares fell after the electrical products distributor revealed its upgraded medium-term financial ambitions ahead of its Capital Markets Day.
### U.S. Economic Reports
According to a closely observed report by the Labor Department, U.S. employment surged by 272,000 jobs in May, significantly exceeding economists' expectations of a 185,000 job increase. The prior month's job growth was revised downward to 165,000 from the initially reported 175,000. The unemployment rate inched up to 4.0 percent in May from 3.9 percent in April, contrary to expectations that it would remain unchanged.
The Commerce Department is set to release its report on April wholesale inventories at 10 am ET, with an expected rise of 0.2 percent. Additionally, Federal Reserve Board Governor Lisa Cook will deliver the commencement address at the Girls Global Academy 2024 Commencement Ceremony at 12 pm ET. At 3 pm ET, the Federal Reserve will publish its report on consumer credit for April, which is anticipated to increase by $11.0 billion.
