Stock Futures Waver After Jobs Report

U.S. stock futures edged up after a disappointing monthly employment report showed the economic recovery remains uneven, boosting expectations that Federal Reserve monetary policy may remain supportive for longer.

Futures tied to the S&P 500 added 0.1% Friday, after wavering between small gains and losses. The broad index has risen for three straight sessions, closing up 0.8% Thursday. Nasdaq-100 futures edged up 0.2% Friday, pointing to technology stocks gently extending the previous day’s rally

The yield on the benchmark 10-year Treasury note climbed above 1.6% before the jobs report was out, for the first time since June. It then edged down to 1.573%.

The U.S. added 194,000 jobs in September, data showed Friday, substantially less than expected and down from August. Economists had forecast a gain of 500,000 jobs. The end of federal Covid-related jobless benefits and reopened schools drove some workers back into the labor force, but the Delta variant and persistent staffing shortages are restraining the recovery.

The Federal Reserve has said the labor market’s recovery is the key variable driving monetary policy and investors are watching closely to see if Friday’s report could affect plans to taper stimulus. 

Stocks are on track for their best weekly performance in six weeks. Volatility returned to markets in recent days, with the S&P 500 swinging at least 1% for three out of four days this week. Investors were focused on surging energy prices, concerns about inflation and negotiations on the debt ceiling. Lawmakers struck a deal for a short-term extension to the debt limit in the Senate on Thursday, which helped boost market sentiment, investors said. 

“Any pullback we’ve seen attracts investors. It seems to us that any 1-3% fall in equity markets just has investors coming back in,” said John O’Toole, head of multiasset fund solutions at Amundi. “The relief rally that we’ve seen, that probably stays for a bit.” His strategy is also to wait for pullbacks to add equity risk.

Oil prices rose, with global benchmark Brent adding 0.6% to trade at $82.45. The Energy Department rebuffed claims that it was planning to release strategic reserves of oil to counter the rise in energy prices. 

“This was the second news of the week where there was hope for additional supply; OPEC also stuck to its plan and didn’t release any additional production,” said

Esty Dwek,

chief investment officer of FlowBank. “There is underlying support for prices. The Covid story is fading and demand for energy, especially when we get into the winter, is going to stay up. It’s a concern for markets but I don’t think it will derail the recovery.” 

Overseas, the pan-continental Stoxx Europe 600 declined 0.1%. Among European equities, energy stocks gained on the back of the rise in crude prices. Eni added 1.5% and Equinor climbed 2.3%.

Most major benchmarks in Asia rose. Mainland China’s markets reopened after the Golden Week holiday, with the Shanghai Composite Index advancing 0.5%. Hong Kong’s Hang Seng Index added 0.3% while Japan’s Nikkei 225 climbed 1.3%.

Volatility has returned to markets in recent days.



Photo:

brendan mcdermid/Reuters

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

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