Key facts
- US stock index futures extended gains on Friday following the release of July employment data.
- The US economy shed 23,000 nonfarm payroll jobs in July, contrary to economists' expectations of 80,000 additions.
- The unemployment rate decreased to 4.1% in July from 4.2% in June.
- Average hourly earnings increased by 3.2% year-over-year in July, below the 3.5% forecast.
- Rate futures now price in a 43.9% chance of a September Fed rate hike, down from 57% previously.
U.S. stock index futures extended gains on Friday after data showed the U.S. economy unexpectedly shed jobs in July, dampening expectations of an interest-rate hike in September. The Labor Department reported that nonfarm payrolls fell by 23,000 in July, significantly below the 80,000 additions economists had forecast. The unemployment rate eased to 4.1% in July from 4.2% in June. Average hourly earnings rose 3.2% on an annual basis in July, compared with the 3.5% economists had expected.
Interest rate futures reflected the shift in expectations, with the market pricing in only a 43.9% chance of a Federal Reserve tightening in September, down from 57% before the jobs report. The probability of the Fed holding rates next month rose to 60.4% from 43.2% prior to the data release.
Earlier in the week, U.S. stock futures had edged higher as investors reacted to upbeat corporate earnings and turned their attention to the July nonfarm payrolls report. Airbnb shares jumped about 11% after the vacation rental company exceeded Wall Street forecasts and raised its full-year outlook. Cloudflare shares climbed roughly 15% after reporting better-than-anticipated revenue and earnings, benefiting from growing demand for technology supporting artificial intelligence applications.
At 9:33 a.m. ET on Friday, U.S. S&P 500 E-minis were up 0.34%, Nasdaq 100 E-minis were up 0.76%, and Dow E-minis were up 0.18%. Major Wall Street indexes were on track for solid weekly gains, with the S&P 500 heading toward a 2.9% weekly advance, the Dow Jones Industrial Average up 2.7%, and the Nasdaq Composite positioned for a 3.8% gain.