NASDAQ 100, Dow Jones, S&P 500: Traders Weigh Jobs Report, Tech Earnings

Highlights

• NASDAQ-100 futures rise amidst latest tech earnings.
• Labor market data eagerly anticipated by investors.
• Major indexes predicted to end the week lower.

Overview

On Friday morning, as Wall Street analyzed the latest earnings from key technology companies and anticipated an important employment report, NASDAQ-100 futures nudged higher. Futures attached to this tech-centered index saw a 0.6% rise, while the S&P 500 futures and those tied to the Dow Jones Industrial Average increased by 0.4% and 0.2% respectively.

Earnings Reports Stir Dramatic Stock Movements

A torrent of post-market earnings reports on Thursday brought dramatic movements in individual stocks. Amazon shares leapt 8.6% after smashing profit expectations and issuing a bright outlook. Conversely, Apple shares slipped around 1.7% as its revenue fell short of the previous year’s same-quarter performance. Beyond the tech behemoths, Airbnb‘s shares took a hit as the company revealed a slower-than-anticipated growth in bookings. Conversely, DraftKings and Dropbox saw boosts of around 14% and 4% respectively, following stronger than expected reports. To date, about 79% of S&P 500 companies have released their earnings, with around 80% beating Wall Street’s expectations, according to FactSet.

Investors Eye Jobs Data, Economy Strength

As we look forward to Friday morning’s jobs data, investors are keen to understand the labor market’s strength and the overall economic health. Slower growth in hourly earnings is seen as a positive sign that previous interest rate hikes by the Federal Reserve have had their intended effects on the economy. Economists surveyed by Dow Jones anticipate nonfarm payrolls to increase by 200,000 in July, with the unemployment rate remaining steady at 3.6%, and an expected rise in average hourly wages by 0.3% from June and 4.2% on an annualized basis.

US Stocks Dip Amid Yield Rise

On Thursday, US stocks ended slightly lower after a volatile trading session. Investors balanced the rise in Treasury yields against the latest economic data and earnings. The benchmark U.S. 10-year Treasury yield hit a high of 4.198%, its highest level since last November, continuing its ascent after Fitch’s downgrade of the U.S. top-tier credit rating. A rise in bond yields often dents the attractiveness of stocks.

Short-Term Forecast:  Mixed to Lower

In the short-term, the three major indexes are predicted to close the week lower. The NASDAQ Composite and S&P 500 could post their worst weekly performances since March, being down about 2.5% and 1.8% respectively. The Dow has retreated 0.7% on a week-to-date basis, suggesting a bearish outlook for the near term.