US stock futures were firmly in the green Friday morning as investors looked ahead to a new month of trading and pondered fresh data out of Washington on the state of the labor market.
Contracts on the S&P 500 and Dow Jones Industrial Average were each up 0.4% in early trade. Futures on the Nasdaq Composite rose 0.5%. The moves come after Wall Street’s most closely watched indices all posted their worst quarters since early 2020.
Investors will be watching the Department of Labor’s monthly jobs report on Friday, which provides the most updated snapshot of the strength of hiring across the US economy. US employers added 431,000 jobs in March. According to Bloomberg data, consensus economists expect nonfarm payrolls to rise by 490,000 for March, slowing from February’s 678,000 gain but still posting a rise well above pre-pandemic trends. The jobless rate fell to 3.6%, better than the expected 3.7% – the lowest level since February 2020.
Stocks are pushing into April after a volatile trading month and quarter. The S&P 500 and Dow each fell more than 4.5% in the first three months of 2022, ending their worst quarters — and first quarterly declines — since the first quarter of 2020. The Nasdaq Composite posted the largest decline, losing 9 .1% from the trailing three-month period, as investors turned away from the technology and growth stocks that had propelled the market last year.
April has historically been a strong month for stocks, actually delivering positive returns for the S&P 500 in 15 of the last 16 years, according to LPL Financial’s Ryan Detrick. This time around, however, stocks face a variety of headwinds that could turn this historically positive seasonality on its head.
Namely, the confluence of concerns over the geopolitical and macroeconomic backdrop contributed to the worst quarterly performance for equities in two years and has yet to be fully resolved. Geopolitical risks have risen since Russia invaded Ukraine in late February, raising the specter of more trouble for global supply chains already struggling to recover from pandemic-era disruptions. A broad-based rise in prices, particularly oil and energy prices, has further fueled concerns about the future resilience of consumers – the main driver of the domestic economy. And the Federal Reserve has embarked on a protracted process of raising interest rates and tightening financial conditions in a market that had become accustomed to loose monetary policy since 2020.
The story goes on
“I think investors are very happy that the quarter is over. It was hard. Obviously inflation was bad through the end of the quarter,” Upholdings portfolio manager Robert Cantwell told Yahoo Finance Live on Thursday. “And in all likelihood, it’s likely to continue to be bad news for the next four to six weeks because inflation is continuing and we’re still delivering record growth rates from the first four months of last year.”
“However, in the second half of the next quarter, you could see a scenario where growth rates are accelerating again while inflation is easing, and that has the potential to bring a lot of bulls back into the market,” he added.
LPL Financial cautions that corporate earnings could be another component driving the recent stock recovery. Even with war in Eastern Europe and decades of high inflation, gains have held up and estimates for the next four quarters of S&P 500 Index earnings per share are higher in March. Although not much at 1.5%, the positive prognosis is significant under the circumstances – especially when compared to how other countries have fared. Inflation drives larger corporate profits as companies enjoy more pricing power as they pass higher costs on to customers.
“Because of energy independence, US corporate earnings trajectories have so far not been impacted by rising energy costs and high inflation,” noted LPL Financial’s equity strategist Jeffrey Buchbinder, adding that conversely, earnings expectations in international markets fell in March. “US earnings prospects are the envy of the world right now.”
Elsewhere on the company front, meme-stock favorite GameStop revealed in a Form 8-K filed with the SEC after Thursday’s market close that the video game retailer will seek approval for a stock split at its upcoming shareholder meeting. GME follows a growing list of big companies — Alphabet, Amazon, Tesla — in what could be the “summer of stock splits.” Stock splits are a corporate action taken to improve trading liquidity and make stocks more affordable without impacting market capitalization. GME rose as much as 20% to a 4-month high of more than $200 a share in extended trading after the news.
8:30 a.m. ET: New payslips coming in lower than expected
The US economy posted another sizeable wage gain in March as the labor market continued its strong and rapid recovery to bring employment back to pre-pandemic levels. US employers added 431,000 jobs, down from the 490,000 expected. Meanwhile, the unemployment rate fell to 3.6% from 3.8% in February.
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7:14 am ET Thursday: Futures priced higher to begin April trading
Here were the key moves in futures trading ahead of the open Friday:
S&P 500 Futures (ES=F): +22.00 points (+0.49%) to 4,552.75
Dow futures (YM=F): +172.00 points (+0.50%) to 34,790.00
Nasdaq Futures (NQ=F): +80.00 points (+0.45%) to 14,948.75
raw (CL=F): +$0.14 (+0.14%) to $100.14 a barrel
Gold (GC=F): -$21.90 (-1.12%) to $1,932.10 per ounce
10-year government bonds (^TNX): 0.00 bps gives 2.3270%
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6:12 p.m. ET Thursday: Stock futures open slightly higher
Here’s where the major stock index futures opened Thursday night:
S&P 500 Futures (ES=F): +12.5 points (+0.28%) to 4,543.25
Dow Futures (YM=F): +100 points (+0.29%) to 34,718.00
Nasdaq Futures (NQ=F): +51.75 points (+0.35%) to 14,920.50
NEW YORK, NEW YORK – MARCH 28: Traders work on the floor of the New York Stock Exchange (NYSE) on March 28, 2022 in New York City. After a positive week for stocks, the Dow Industrial Average fell over 100 points in morning trade. (Photo by Spencer Platt/Getty Images)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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