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Notably slower wage growth offset a stronger-than-expected December jobs report, sending U.S. stocks firmly higher in early Friday trading.
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U.S. equity futures extended gains Friday, while the dollar eased against its global peers and Treasury yields nudged lower, as investors reacted to a better-than-expected jobs report that could ease some near-term inflation concerns following hawkish Fed minutes earlier this week.
The U.S. economy added 223,000 new jobs last month, the Labor Department said Friday, but wage growth slowed notably from November, suggesting the gains may not feed as quickly into inflation pressures.
The BLS noted that hourly wages were up 0.3%, around half of last month’s gain, and came in light of Street forecasts of a 0.4% gain. On a year-on-year basis, wages were up 4.6%, compared to the 5.1% pace recorded in December, the BLS said.
JOLTs data for the month of November had indicated around 10.45 million open positions, a level that analyst worried could feed in to pay gains over the coming months, and ADP’s national employment report showed a stronger-than-expected gain of 235,000 last month.
Benchmark 2-year Treasury note yields, which touched the highest levels in 2 months yesterday, eased 5 basis points to 4.423% following the data release as bets on a 50 basis point rate hike from the Fed slipped modestly to around 40%, based on data from the CME Group’s FedWatch. Benchmark 10-year notes fell 3 basis points to 3.705%.
Consumer price pressures are starting to ease in other major economies, however, in moves that could be replicated here in the U.S., following data Friday showing a significant pullback in headline inflation in Europe, which slowed to 9.2% in December from the record high print of 10.1% the previous month.
Heading into the start on Wall Street, futures tied to the S&P 500 are priced for a 43 point opening bell gain while those linked to the Dow Jones Industrial Average are set for a 370 point advance. The tech-focused Nasdaq, which is on pace for a fifth consecutive weekly decline, is looking at a 140 point gain.
Tesla (TSLA) – Get Free Report shares were 7.2% lower in pre-market trading following reports that the carmaker has extend price cuts in key Asia markets this week, suggesting further demand challenges into the start of the year.
World Wrestling Entertainment (WWE) – Get Free Report shares surged 10% after founder Vince McMahon said he would return to the media and entertainment group following his retirement last year following a probe into so-called ‘hush money’ payments to a former employee.
Apple (AAPL) – Get Free Report shares jumped 1.1% even as Samsung Electronics, the world’s biggest chipmaker and key smartphone rival, said it will likely post its weakest quarter profit in eight years amid fading consumer and business demand.
Costco Wholesale (COST) – Get Free Report shares, meanwhile, rose 2.8% after the bulk discount retailer posted solid December sales figures that suggest solid spending demand over the key Christmas holiday period.