(Thursday Market Open) Equity index futures are pointing to a higher open as signs of weakness in the labor market may let the Fed take their proverbial foot off the economic brake.
Potential Market Movers
Earlier this week, the JOLTS job openings were higher than expected but lower than the previous month. This morning the Challenger Jobs Cuts report saw an uptick in corporate layoff announcements and the initial jobless claims also came in higher than expected. Equity index futures rose after the Challenger report as a possible indicator that tomorrow’s Employment Situation report may be weaker than the consensus for 250,000 jobs added during June.
Though it may seem odd to see job losses as good news, the overheated hiring market has led to wage inflation and weaker corporate earnings. But signs that the labor market is weakening, and inflation is abating could prompt the Fed to be less aggressive in future rate hikes.
It’s news that appears to be helping investor confidence. The Cboe Market Volatility Index (VIX) was lower once again this morning testing its recent lows around the 26.5 level. This VIX level appears to be correlating with the 3,870 level in the S&P 500 futures . If the level is broken, the S&P 500 may test last week’s highs around 3,900.
Commodity markets are attracting increased attention as oil, precious metals, and lumber continue to tumble. Downswings are also happening in grains including corn, soybeans, and oats. The Bloomberg Commodity Index futures are down more than 18% from its June high, although its heavily weighted towards oil. Nonetheless, many investors are perceiving the weakness in commodities as a sign of an oncoming recession, but it may be that the U.S. dollar strengthening over the last 14 months is finally curbing inflation.
British Prime Minister Boris Johnson’s resignation was big news this morning and the British pound did trade higher afterward as did the London’s FTSE 100, which gained 1%. There was even a small upward blip in the S&P 500 futures overnight after the announcement. But as the trading day goes on, the news is unlikely to prompt much more movement.
After the market close, Levi Straus (NYSE: LEVI ), WD-40 (NASDAQ: WDFC ), and PriceSmart (NASDAQ: PSMT ) will report earnings giving a bit of preview of next week’s unofficial earnings season kickoff.
Reviewing the Market Minutes
The U.S. Dollar Index ($DXY) closed 0.50% higher on Wednesday, yet another 52-week high for the greenback. While ...
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