3rd Jun 2016 12:57
WASHINGTON (Alliance News) - Following the release of disappointing jobs data, stocks are likely to come under pressure in early trading on Friday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 75 points.
The downward momentum for the markets comes following the release of a report from the Labor Department showing much weaker than expected job growth in the month of May.
The Labor Department said non-farm payroll employment edged up by just 38,000 jobs in May compared to economist estimates for an increase of about 158,000 jobs.
The job gains in March and April were also downwardly revised to 186,000 and 123,000, respectively, reflecting a net downward revision of 59,000 jobs.
The report said the unemployment rate still fell to 4.7% in May from 5.0% in April, as people left the labor force. The unemployment rate had been expected to dip to 4.9%.
Meanwhile, the Labor Department also said average hourly employee earnings climbed USD0.05 to USD25.59 in May. Wages were up by 2.5% year-over-year.
The weaker than expected job growth partly reflected a recent strike by Verizon (VZ) workers, although the data is still likely to raise concerns about the economy.
At the same time, the disappointing data is likely to ease recent speculation about the possibility of a near-term interest rate hike by the Federal Reserve.
The jobs report has overshadowed a separate report from the Commerce Department showing that the US trade deficit widened in the month of April.
The report said the trade deficit widened to USD37.4 billion in April from a revised USD35.5 billion in March. The deficit had been expected to widen to USD41.0 billion from the USD40.4 billion originally reported for the previous month.
The wider deficit came as the value of imports jumped 2.1% to USD220.2 billion, while the value of exports climbed 1.5% to USD182.8 billion.
Shortly after the start of trading, the Institute for Supply Management is scheduled to release a report on activity in the service sector in the month of May.
The ISM's index of activity in the service sector is expected to edge down to 55.5 in May after climbing to 55.7 in April, although a reading above 50 would indicate continued growth.
A separate report from the Commerce Department is expected to show that factory orders jumped by 2.0% in April after rising by 1.1% in March.
After coming under pressure early in the session, stocks once again showed a significant turnaround over the course of the trading day on Thursday. With the rebound, the Nasdaq and the S&P 500 reached their best closing levels of 2016.
The major averages saw further upside going into the close, ending the day at their highs for the session. The Dow rose 48.89 points or 0.3% to 17,838.56, the Nasdaq advanced 19.11 points or 0.4% to 4,971.36 and the S&P 500 climbed 5.93 points or 0.3% to 2,105.26.
Copyright RTT News/dpa-AFX