Traders on the NYSE floor, July 12, 2022.
Source: New York SE
US stock futures edged higher on Sunday night as investors eyed the key inflation data and the start of the first-quarter earnings season.
Futures linked to the broader market S&P 500 rose 0.2% and Dow Jones Industrial Average futures rose 62 points, or 0.2%. Nasdaq 100 futures were flat.
On Thursday, key moving averages rose to end a holiday-shortened trading week. However, only the Dow posted a weekly gain of 0.6%, while the S&P 500 and Nasdaq Composite posted weekly losses, closing 0.1% and 1.1% lower, respectively.
The market was volatile as economic data showed signs of a slowdown in the labor market. However, Friday’s March jobs report showed a robust economy and moderate inflation, pushing equity futures and government bond yields higher. The New York Stock Exchange was closed on Good Friday.
Nonfarm payrolls rose 236,000 this month, roughly in line with the Dow Jones estimate of 238,000, the Labor Department reported. Unemployment fell to 3.5%, against expectations that it would remain at 3.6% from the previous month.
According to Jason Pride, Chief Investment Officer of Private Wealth at Glenmede, the data is consistent with expectations of a slowly evolving recession in the US – one that does not point to an immediate resolution to inflation concerns.
“Therefore, the chances of another quarter-point rate hike in May should increase as the data doesn’t seem to warrant a Fed pause,” he added.
Yung-Yu Ma, chief investment strategist at BMO, said the level of job creation in March “reflects a sizeable buffer in the economy to cushion the impact of an economic slowdown.”
“The report is landmark, but not enough to change Fed thinking,” he added. “It’s probably yet to be seen whether the Fed will hike another 25 basis points and remain flat at its next meeting; the next inflation data will probably be the deciding factor.”
Investors are in for a busy week of economic data, including the latest consumer price index and producer price index data – which rate Wednesday’s hiking campaign, respectively.
You also get the first group of companies to report financial results for the first quarter. Tilray Brands launches Monday. The big banks — JPMorgan Chase, Wells Fargo and Citigroup — are due to report on Friday.