Dow Set to Open Up as Market Rebounds Following Dire Jobs Report
Stock futures were rising Monday as investors bought the dip in equities, after last week’s weak jobs report appeared to boost the chances that the Federal Reserve will cut interest rates soon.
Futures tracking the Dow Jones Industrial Average were up 271 points, or 0.6%. S&P 500 futures added 0.7%, and contracts tied to the tech-heavy Nasdaq 100 jumped 0.8%.
The three benchmark indexes had plummeted Friday after a weaker-than-expected nonfarm payrolls report that erased more than a quarter of a million jobs from May and June after revisions, reviving fears about the health of the U.S. economy.
One silver lining is that the data could put pressure on the Fed to slash borrowing costs. Before Friday, traders were pricing in a 38% chance of a rate cut at the central bank’s September meeting. The odds have now climbed to about 80%, according to the CME FedWatch tool.
“Typically, the week following payrolls is quieter for US data, but given Friday’s shock revisions, commentary from Fed officials may prove more influential than the data itself,” Deutsche Bank strategist Jim Reid wrote Monday, noting that Fed Governor Lisa Cook and Boston Fed CEO Susan M. Collins were both due to appear on a panel on Wednesday.
Investors will also be watching how quickly President Donald Trump moves to replace Fed Governor Adriana Kugler, who is stepping down on Aug. 8. Her early exit gives Trump an opportunity to reshape the central bank’s board, as he ramps up pressure on Chair Jerome Powell for aggressive rate cuts.
The yield on the benchmark 10-year U.S. Treasury note climbed 3 basis points to 4.25% on Monday. The dollar slid 0.2% against a weighted basket of its peers, and gold ticked up 0.2% to $3,405 an ounce.