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Dow Jones futures point to muted open ahead of jobs report

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May 5th, 2017
Wall Street futures pointed to muted open on Friday with investors on hold ahead of the publication of the April employment report and the first string of Federal Reserve (Fed) appearances since Wednesday’s decision to keep rates unchanged.

The blue-chip Dow futures slipped 9 points, or 0.04%, at 6:56AM ET (10:56GMT), the S&P 500 futures inched up 1 point, or 0.05%, while the tech-heavy Nasdaq 100 futures edged forward 3 points, or 0.06%.

The U.S. Labor Department will release its April nonfarm payrolls report at 8:30AM ET (12:30GMT) on Friday.

The consensus forecast is that the data will show jobs growth of 185,000, following an increase of just 98,000 in March, the unemployment rate is forecast to inch up to 4.6% from 4.5%, while average hourly earnings are expected to rise 0.3% after gaining 0.2% a month earlier.

The Fed had indicated that it expects the already solid labor market to strengthen further, but some experts warned that a miss in today’s report could force the central bank to rethink its analysis of the U.S. economy.

Markets will be on the watch to make sure the previous report was a one-off and that April data fits in with the schematic that the U.S. is on track for a strong second quarter.

Apart from nonfarm payrolls, investors also await the first official string of appearances after the Fed left rates unchanged this week and gave an upbeat outlook on the economy.

Six policymakers including Fed chair Janet Yellen and vice chair Stanley Fischer may give markets further confirmation of plans to hike rates in June or hints on when they might begin balance sheet normalization.

While waiting for these key references, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.14% at 98.75 by 6:57AM ET (10:57GMT).

Meanwhile, oil prices underwent volatility in Friday’s session with West Texas on track for weekly losses of 7% amid concerns over rising U.S. production, slowing demand from China and a lack of commitment from major oil producers to confirm that they will extend the production cut past the June deadline.

After sharp losses in the prior session, crude had recovered slightly in early morning European trade after the Saudi Arabian energy minister insisted there was an emerging consensus among OPEC and non-OPEC countries who took part in a global pact to cut crude output on the need to extend the agreement beyond June.

However, market skepticism quickly intervened pushing U.S. crude back towards the unchanged mark in early North American trade.

Market players were also cautious ahead of Baker Hughes’ weekly data on U.S. drilling activity out later in the session.

The oilfield services provider reported last week that the U.S. rig count rose by 9 to 697, extending an 11-month drilling recovery to the highest level since August 2015.

U.S. crude futures rose 0.15% to $45.59 by 6:58AM ET (10:58GMT), while Brent oil gained 0.45% to $48.60.

In company news, IBM (NYSE:IBM) was in the spotlight with shares off more than 2% in pre-market trade after a CNBC report revealed that famous stock guru Warren Buffett sold off about a third of Berkshire Hathaway’s (NYSE:BRKb) stake in the tech giant.

Buffett owned about 81 million shares of IBM at the end of 2016 and sold about a third in the first and second quarters of 2017, CNBC reported, citing Buffett.

"I don't value IBM the same way that I did six years ago when I started buying ... I've revalued it somewhat downward," Buffett said in the interview late Thursday.

Elsewhere, European stocks were trading mixed near the unchanged mark on caution not only ahead of the aforementioned key references stateside but as investors also waited for the final round of French presidential elections on Sunday.

Though expectations are for the pro-European centrist Emmanuel Macron to win over anti-euro, far right candidate Marine Le Pen, markets remember similar surprise outcomes last year in the U.S. presidential elections with Donald Trump’s victory or the yes on the Brexit vote that started the U.K.’s exit from the European Union despite polls’ indications to the contrary.

Earlier, Asian stocks declined for a third consecutive day on Friday as fresh falls in commodities raised concerns about the health of the global economy, while Japan remained closed for a holiday.


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