Wall Street is leaning toward modest gains before the opening bell Thursday following back-to-back sell-offs to kick off a month that’s expected to bring an interest rate cut from the Federal Reserve.
Futures for the S&P 500 and the Dow Jones Industrial Average were both up just less than 0.1% before the bell.
Markets continued to digest earnings reports and other corporate news ahead of Friday’s all-important government jobs report.
Verizon shares ticked up 1.2% after the telecom giant announced that it’s buying Frontier Communications in a $20 billion deal to strengthen its fiber network. Verizon said the acquisition will help it strengthen its infrastructure as companies the boom in artificial intelligence and the Internet of Things continue to gobble up bandwidth.
Topgolf Callaway jumped 5.3% after the golf equipment company said it intended to spin off its driving range entertainment business, Topgolf, into a separate company. TopGolf accounts for a significant slice of the California company’s revenue, ringing up about $1.8 billion in sales to Callaway’s $2.5 billion in the past four quarters.
The Labor Department will release its monthly jobs report for August on Friday. Economists polled by FactSet expect that report to show that the U.S. added 160,000 jobs, up from 114,000 in July, and that the unemployment rate edged lower to 4.2% from 4.3%. The report’s strength, or weakness, will likely influence the Fed’s plans for how it trims its benchmark interest rate.
Traders are forecasting the Fed will cut its benchmark rate by 1% by the end of 2024. Such a move would require it to cut the rate by more than the traditional quarter of a percentage point at one of its meetings in the next few months.
The market’s pullback this week came as a government report showed job openings in the U.S. fell unexpectedly in July, a sign that hiring could cool further in the coming months. The Labor Department reported that there were 7.7 million open jobs in July, the fewest since January 2021.
Several other reports this week will help give a clearer picture of the economy for the Fed and Wall Street.
The government serves up its weekly report on jobless claims, which serve as a proxy for layoffs.
The Institute for Supply Management will release its services sector index for August, also on Thursday. The services sector is the biggest component of the U.S. economy.
Elsewhere, in Europe at midday, France’s CAC 40 tumbled 0.7%, while German’s DAX rose 0.2%. Britain’s FTSE 100 was effectively flat.
Japan’s benchmark Nikkei 225 slipped 1.1%, and closed at 36,657.09.
Data released Thursday showed Japan’s wage growth remains strong, as average cash earnings in July grew 3.6% year-on-year, beating market expectations, while real earnings unexpectedly increased by 0.4% in July, increasing the likelihood of another rate hike.
The U.S. dollar was trading at 143.50 Japanese yen, fueled by the robust data.
“If global markets remain in risk-off mode — especially with commodities like oil tanking — the Fed could be pressured to pull the trigger on a larger 50-basis-points cut. This would be driven by easing inflation risks, which could send USD/JPY further south,” Stephen Innes of SPI Asset Management said in a commentary.
In South Korea, the Kospi ended 0.2% lower at 2,575.50, as the country’s economy contracted by 0.2% in the second quarter, in line with estimates.
Hong Kong’s Hang Seng index declined 0.1% to 17,444.30 and the Shanghai Composite index was up 0.1% at 2,788.31.
Australia’s S&P/ASX 200 rose 0.4% to 7,982.40.
In the bond market, the yield on the 10-year Treasury was 3.77% early Thursday. That’s down from 4.70% in late April, a significant move for the bond market. The yield on the 2-year Treasury, which more closely tracks potential action from the Fed, was also holding at 3.77%.
In energy trading, benchmark U.S. crude gained 22 cents to $69.42 a barrel. Brent crude, the international standard, rose 36 cents to $73.06 a barrel.
In currency trading, the euro cost $1.1105, up from $1.1082.
Bitcoin continued its recent retreat, declining another 2%. The original cryptocurrency has shed about 11.5% in the past 10 days, falling from above $64,000 to $56,785 Thursday morning.
On Wednesday, the S&P 500 fell 0.2% to 5,520.07. The Nasdaq composite shed 0.3% to 17,084.30. The Dow Jones Industrial Average, however, managed a gain of 0.1% to close at 40,974.97.
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