U.S. equity futures moved lower on Friday after the latest employment report showed stronger-than-expected job creation in August, shifting investor attention back towards the outlook for Federal Reserve interest rates.
The Labor Department reported that nonfarm payrolls increased by 162,000 in August. July’s figure was revised to a gain of 21,000 jobs from the previously reported decline of 23,000.
Economists had forecast an increase of 55,000 jobs for August.
The unemployment rate was unchanged at 4.1%, compared with expectations for an increase to 4.2%.
Treasury yields moved higher following the release as investors considered what the employment figures could mean for the Federal Reserve’s September policy decision.
“Constantly changing interest rate expectations have kept investors on their toes this week,” said Dan Coatsworth, head of markets at AJ Bell.
Treasury Yields Rise as Markets Reassess Fed Outlook
Expectations for a September interest rate increase had fallen earlier in the week following comments from Federal Reserve Governor Christopher Waller.
CME Group’s FedWatch Tool showed a 52.4% probability of a quarter-point increase, compared with 63.2% on Wednesday.
In an interview with Reuters, Waller indicated that he was leaning towards keeping rates unchanged at the upcoming meeting. He said he would be “inclined to support” holding rates steady if forthcoming economic figures continued to show “some signs of disinflation.”
Waller’s comments had contributed to a decline in Treasury yields before Friday’s employment report.
Dow, Nasdaq and S&P 500 Post Thursday Gains
Wall Street had advanced during the previous session as investors responded to lower Treasury yields and changing expectations for monetary policy.
The Dow Jones Industrial Average climbed 624.16 points, or 1.2%, to 53,686.11. The Nasdaq Composite rose 366.23 points, or 1.4%, to 26,584.06, while the S&P 500 gained 81.11 points, or 1.1%, to 7,747.71.
Several equity sectors also recorded gains. The NYSE Arca Gold Bugs Index advanced 3.8%, the NYSE Arca Broker/Dealer Index gained 3.5% and the Dow Jones U.S. Software Index increased 3.2%.
Computer hardware and banking shares also moved higher, while oil services stocks declined.
Snowflake Jumps 16.6% Following Earnings
Snowflake (NYSE:SNOW) gained 16.6% during Thursday’s session after reporting fiscal second-quarter results that exceeded expectations and issuing higher guidance.
Friday’s payroll figures subsequently shifted the market focus back towards the labour market and its potential implications for monetary policy.
Investors will assess the employment report alongside forthcoming economic data as they consider the possible outcome of the Federal Reserve’s September meeting.
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