Stock futures cut losses after stronger-than-expected U.S. jobs report

Futures tied to major U.S. equity averages trimmed their earlier losses on Friday after the release of much stronger-than-forecast U.S. jobs data. 

Dow Jones Industrial Average futures traded 23 points higher, or 0.1%, after being down more than 100 points earlier in the session. S&P 500 futures retraced their losses to traded just below the flatline while Nasdaq 100 futures were down only 0.1%.

The U.S. economy added 1.763 million jobs in July, the Labor Department said Friday. Economists polled by Dow Jones expected a gain of 1.4 million. The U.S. unemployment rate was also better than expected, falling to 10.2%. The jobs reports for June and May were also revised sharply higher. 

To be sure, market sentiment remained in check after President Donald Trump on Thursday issued executive orders to address “the threat posed” by Chinese apps TikTok and WeChat. As part of the order, any transaction with ByteDance and Tencent, the parent companies of TikTok and WeChat, respectively, will be barred in 45 days.

It comes as tensions between Washington and Beijing continue to escalate over several issues including the origins of the coronavirus and democracy in Hong Kong. 

Stimulus talks

Meanwhile, the White House struggle to agree on a new stimulus package after a $600 per week enhanced federal unemployment benefit expired at the end of July.

The Trump administration has threatened to pull out of talks and try to address jobless benefits and the eviction moratorium by executive action if the sides fail to reach an agreement by Friday. Top lawmakers told CNBC Thursday that they expect a compromise to be hatched but big differences still remain.

Talks between negotiators ended Thursday evening without a breakthrough in sight as discussions edged closer to the Trump administration’s Friday deadline for striking an agreement. White House officials criticized Democrats as uncompromising while Democrats argued that the GOP failed to appreciate the severity of the recession.

“We’re still a considerable amount apart in terms of a compromise that could be signed into law,” White House chief of staff Mark Meadows said of the meetings. 

“We’re very far apart,” said Democratic House Speaker Nancy Pelosi.

The stock market is coming off five consecutive days of gains as the technology sector built on its momentum. This week’s gains in the S&P 500 pushed the equity benchmark just 1.3% below its Feb. 19 record. The Nasdaq Composite also closed above 11,000 for the first time ever on Thursday. 

“These big round numbers are a nice reminder of just how strong this rally has been since the March lows,” said Ryan Detrick, chief investment strategist for LPL Financial. “When you look at how strong earnings and guidance have been from the group, you realize there’s a reason the Nasdaq is at 11,000 and why eventual continued strength is quite likely.”

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