PHOTO
Wall Street's main indexes were set for a higher open on Friday after a crucial labor report eased concerns about a rapid cooldown in the jobs market, while investors remained vigilant for potential escalations in the Middle East conflict.
A Labor Department report showed nonfarm payrolls rose 254,000 in September, more than the estimate of 140,000, according to economists Reuters polled. The unemployment rate dipped to 4.1% for the previous month, versus an estimate of 4.2%.
Odds of a 25-basis-point reduction at the U.S. Federal Reserve's November meeting rose to 85.5%, up from more than 71% before the data, according to the CME Group's FedWatch Tool.
"For the economy, it means that a soft landing is happening. We continue to add jobs at a rapid clip and the unemployment rate continues to tick down," said Ross Mayfield, investment strategist at Baird.
"It means the Fed is unlikely to cut (by) 50 basis points in November or December, certainly, and maybe even take a pause in November."
Dow E-minis were up 204 points, or 0.48%, S&P 500 E-minis were up 40.25 points, or 0.70% and Nasdaq 100 E-minis were up 197.75 points, or 0.99%.
Futures tracking the small-cap Russell 2000 index rose more than 1%.
Yield on two-year Treasury notes rose to 3.87% after the data was released as investors priced out a larger reduction by the Fed in November.
Rate-sensitive growth stocks such as Tesla added 2.2%, Amazon.com climbed 1.9%, while chip giant Nvidia rose 1.3% in premarket trading.
The labor market has been under greater scrutiny after the U.S. central bank slashed interest rates in September by a rare 50 basis points to stave off further weakening in employment.
Traders expect borrowing costs to fall by an additional 56 bps before the year ends, down from an estimate of nearly 79 bps a week ago, according to data compiled by LSEG, as recent reports pointed to strong service sector activity in September.
Wall Street's main indexes closed lower on Thursday and were set to finish the first week of October on a weaker footing as investors were nervous about escalating tensions in the Middle East and the workers' strike earlier this week.
Analysts said the events could impact the inflation and labor figures for October.
Energy stocks such as Occidental Petroleum edged higher 0.71% while Exxon Mobil and Chevron crept up 0.60% each as crude prices surged on worries of supply disruptions in the Middle East due to the widening regional conflict.
The S&P 500 Energy sector is on track to log its biggest weekly jump since March 2023.
Meanwhile, ports on the East and Gulf Coasts began reopening late on Thursday after workers reached a wage deal, but clearing the cargo backlog will likely take time. U.S. shares of Zim Integrated Shipping Services were down 11%.
Among others, Spirit Airlines nosedived 33% after a report showed the carrier was in talks with bondholders about the terms of a potential bankruptcy filing after its failed merger with JetBlue Airways.
(Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Pooja Desai)