Stock futures sank Thursday morning following fresh concerns over geopolitical ties with Russia and China. Traders also looked ahead to jobs data out later in the morning and on Friday.
Investor sentiment turned lower after Russia’s finance minister announced the country will entirely remove U.S. dollar assets from its National Wealth Fund and instead shift further to euros, yuan and gold, with the threat of sanctions from the U.S. looming. Elsewhere, President Joe Biden is reportedly planning to amend a ban on investments in companies with ties to China’s military, according to Bloomberg, in a move that would target key industries in the world’s second largest economy.
Earlier, stocks had been in a holding pattern this week ahead of key economic data releases. ADP released its closely watched report on private payroll changes for May Thursday morning, which showed a better than expected 978,000 jobs were added back last month versus the 650,000 expected. And the Labor Department’s report on new weekly unemployment claims is expected to show new filings broke below 400,000 for the first time since March 2020, with fewer individuals becoming newly unemployed as more areas of the economy reopen.
Both reports will set the stage for the Labor Department’s May jobs report out Friday morning, which will be instrumental in determining the strength of the economic recovery and suggesting whether the Federal Reserve might soon be due to taper its crisis-era asset purchase program. April’s sharply disappointing jobs report – with a paltry 266,000 jobs added back while 1 million had been expected – served as fuel for the Fed to stay on hold with current policies. But this stance could be undercut by a marked improvement in data, some pundits noted.
“The May employment numbers are really very important,” Steven Blitz, TS Lombard U.S. economist, told Yahoo Finance. “That’s really going to set in the market’s mind whether or not the Fed announces a taper at the end of July or whether it’s at some later date.”
Other pockets of the market have also garnered considerable attention. The so-called so-called “meme stocks,” or stocks that have become popular on the Reddit forum r/wallstreetbets, gave back gains in early trading after rallying strongly on Wednesday. Shares of AMC Entertainment Holdings (AMC) fell 9% after doubling on Wednesday. The resurgence in retail investor interest also lifted shares of companies including Naked Brand Group (NAKD), BlackBerry (BB) and Bed Bath & Beyond (BBBY), though many of these speculative trades lost steam in the early morning session.
“I don’t know if it’s so much a threat to the market. It’s more of a learnings experience,” Ryan Nauman, Zephyr market strategist, told Yahoo Finance of the surge in meme stocks. “This is no longer our grandparents’ or our parents’ stock market. Now, investment professionals, they might need to start looking at alternative data sets, rethinking their investment theses to consider this growing cohort of retail investors.”
8:15 a.m. ET: Private payrolls surged by 978,000 in May, topping estimates: ADP
Private payrolls rose far more than expected last month, with some of the industries hardest-hit by social distancing requirements making strides to recover jobs as the economy emerges from the pandemic.
U.S. private employers added back 978,000 payrolls last month, ADP said in its closely watched monthly jobs report on Thursday. This followed a downwardly revised rise of 654,000 in April. Consensus economists were looking for private payrolls to increase by 650,000 in May, according to Bloomberg data.
By sector, service-providing employers again added the most jobs by far last month at a net 850,000. Leisure and hospitality jobs increased by 440,000, and education and health services employment rose by 139,000 in May. Trade, transportation and utilities jobs also increased by a strong 118,000. Information industry employers were the only ones to shed jobs on net last month, with these ticking down by 3,000.
7:30 a.m. ET Thursday: Stock futures fall
Here’s where markets were trading ahead of the opening bell:
S&P 500 futures (ES=F): 4,178.00, -28.25 points (-0.67%)
Dow futures (YM=F): 34,398.00, -192.00 points (-0.56%)
Nasdaq futures (NQ=F): 13,548.00, -125.75 points (-0.92%)
Crude (CL=F): -$0.10 (-0.15%) to $68.73 a barrel
Gold (GC=F): -$15.70 (-0.82%) to $1,894.20 per ounce
10-year Treasury (^TNX): +1.2 bps to yield 1.603%
6:16 p.m. ET Wednesday: Stock futures edge higher
Here’s where markets were trading Wednesday evening:
S&P 500 futures (ES=F): 4,207.25, +1 point (+0.02%)
Dow futures (YM=F): 34,592.00, +2 points (+0.01%)
Nasdaq futures (NQ=F): 13,683.50, +9.75 points (+0.07%)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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