U.S. futures move higher before key labor market data

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U.S. futures move higher

Highlights

Dow, S&P 500, and Nasdaq-100 futures are rising.
Oil prices are falling sharply ahead of the jobs report.
Treasury yields remain near multiyear highs.

Dow Jones futures were up 298 points, or 0.58%, at 51,539, while S&P 500 futures gained 0.48% to 7,761 and Nasdaq-100 futures advanced 0.63% to 30,955, according to the latest market data. Oil prices had fallen sharply while Treasury yields stabilized after Thursday's volatile session, CNBC reported.

Oil retreats as bond yields stabilize

Crude prices dropped after reports that the U.K. and European countries were considering releases from strategic fuel reserves. Brent crude was trading around $99.94 a barrel, down 2.32%, while earlier figures showed West Texas Intermediate falling more sharply.

Lower oil prices can reduce pressure on inflation expectations, an important consideration after the recent surge in government borrowing costs. The 10-year Treasury yield was around 5.226% early Friday, little changed after reaching 5.344% on Thursday, its highest level since 2002.

The 30-year yield had also reached a 24-year high before retreating. Those swings have kept borrowing costs at levels that can weigh on equity valuations, particularly for companies whose share prices depend heavily on future earnings.

Thursday ended with modest gains on Wall Street. The Dow Jones and Nasdaq Composite finished slightly higher, while the S&P 500 added 0.2%. Despite that advance, all three major indexes remained on course for weekly declines.

Job data takes center stage

September nonfarm payrolls are expected to show an increase of 84,000 jobs, according to the Dow Jones consensus, while unemployment is forecast to remain at 4.1%.

The report arrives with interest rate expectations still unsettled. Fed funds futures indicate a 72% probability that the Federal Reserve will leave rates unchanged in October, according to the market data cited in the report.

Asian markets finished mixed Friday, while European equities moved higher in early trading. Japan's Nikkei 225 declined 0.94%, South Korea's Kospi gained 0.46%, and Australia's S&P/ASX 200 rose 0.69%.

Labor data could set the next direction

Fridays employment report will give markets a fresh measure of whether the U.S. labor market is holding up as borrowing costs remain elevated. Strong hiring would reinforce evidence of economic resilience, while weaker figures could alter expectations for monetary policy.

Falling oil prices provide a separate source of relief by reducing one source of inflation pressure. The interaction between employment, energy prices, and bond yields will remain central to the outlook for equities as investors assess the path of interest rates.

We have previously highlighted that France loses investor appeal as debt risks mount.

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