U.S. stocks on Friday were set to trade modestly lower a day after all three benchmark indexes finished at records, and markets digested January job that exceeded expectations.
Also on investors’ radar were the ongoing efforts to contain the fast-moving coronavirus and a hectic week of corporate earnings reports.
How are the major benchmarks faring?
Futures on the Dow Jones Industrial Average YMH20, -0.32% were down 112 points, or 0.4%, at 29,213, while S&P 500 futures ESH20, -0.29% were off 12.45 points, or 0.4%, at 3,332.50. Nasdaq-100 futures NQH20, -0.39% retreated 45.50 points, or 0.5%, to 9,409.75.
On Thursday, the Dow DJIA, +0.30% closed up 88.92 points, or 0.3%, at 29,379.77, after carving out an intraday record at 29,408.05. The S&P 500 index SPX, +0.33% rose 11.09 points, or 0.3% to close at 3,345.78. The Nasdaq Composite Index COMP, +0.67% advanced 63.47 points, or 0.7% to settle at 9,572.15.
Equity benchmarks are on pace for sizable weekly gains, with the Dow up 4% for the week, the S&P 500 index advancing 3.7%, and the Nasdaq gaining 4.6%, as of Thursday’s close.
What’s driving the market?
The U.S. economy added 225,000 jobs in January, well above the 165,000 jobs expected by economists polled by MarketWatch, while the unemployment rate ticked up slightly to 3.6% as the share of Americans in the labor force — either employed or actively looking for employment rose by 0.2 percentage point.
Stock-index futures were trading modestly lower, however, after a week of aggressive gains that saw markets erase losses last week, which were driven by concerns over the outbreak of coronavirus.
Average hourly wages rose 0.2% last, versus expectations of a 0.3% rise. Year-over-year, earnings have gained 3.1%, down from a postrecession peak of 3.4% in February.
“January’s better-than-expected jobs report is well-timed in that it boosts economic confidence just when coronavirus fears had investors questioning the growth outlook,’ according to Alec Young, managing director of global markets research at FTSE Russell.
“That said, stocks are overbought after a huge rally, some of which has been predicated on hopes for a June Fed rate cut which now seems highly unlikely,’ he added. “As such, equities may not react positively in the near term despite the strong read on the labor market.”
Meanwhile, China’s National Health Commission on Friday confirmed more than 31,000 cases of the deadly pneumonialike virus in the country, with more than 630 deaths. The disease also continues to spread outside the country.
The People’s Bank of China has injected 1.7 trillion yuan ($243.88 billion) of liquidity into the financial system to stem the impact from the Wuhan virus that has hurt travel and economic output, and the government is considering additional stimulus to stem any downturn, according to the Associated Press.
Analysts estimate that China’s gross domestic product will likely slow to 5%, but most of the effects are likely to dissipate after the first quarter.
“The coronavirus outbreak will be temporary and will not change the long-term improvement of China’s economy,” said Pan Gongsheng, a PBOC vice governor, at a news briefing Friday.
The disease has made some investors cautious headed into the weekend.
“But with the market already in defensive setup ahead of the weekend, we could see a further selling as investors continue to hedge weekend risk against additional contagion alerts spreading beyond [Asian] borders,” wrote Stephen Innes, chief market strategist at AxiCorp, in a note.
Looking ahead, investors may also watch for a report on wholesale trade at 10 a.m., and consumer credit at 3 p.m.
Which stocks are in focus?
- Canada Goose Holdings Inc.’s U.S. listed shares GOOS, +2.90% were down sharply as it said coronavirus has had a “material negative impact.”
- Shares of AbbVie Inc. ABBV, +0.63% gained in the premarket after the drugmaker beat earnings expectations.
- Vans parent VF Corp. shares VFC, -0.61% slid in premarket trade Friday, after the company said it has closed about 60% of its stores in China.
- Fidelity National Financial FNF, +0.02% announced Friday a deal to buy insurer FGL Holdings FG, +19.35% in a deal valued at $2.7 billion.
- Shares of Credit Suisse CSGN, -0.43% CS, +0.85% fell in the wake of the resignation of CEO Tidjane Thiam.
- EBay Inc. shares EBAY, +2.36% decline after Intercontinental Exchange Inc. ICE, -2.98% said that it was no longer looking to acquire the company.
- Madison Square Garden MSG, +0.01% saw its shares rise before the bell after it beat fourth-quarter earnings estimates.
How are other markets trading?
Investors were bidding up government bonds, with the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -2.53% down about 5 basis points to 1.60%. Bond prices move inversely to yields.
Oil prices were on the decline. The price of a barrel of West Texas Intermediate crude for March delivery CLH20, -1.28% fell 61 cents, or 1.2% to $50.33. In precious metals, gold for April GCJ20, +0.08% as virtually unchanged at about $1570 an ounce.
The U.S. dollar DXY, +0.12% gained 0.1% relative to a basket of six trading peers.
In Europe, stocks were in retreat, with the Stoxx Europe 600 down 0.5%.
In Asia overnight, stocks traded mixed. The China CSI 300 000300, +0.00% was virtually unchanged, while Japan’s Nikkei 225 NIK, -0.19% lost 0.2% and Hong Kong’s Hang Seng HSI, -0.33% lost 0.3%
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