Strong April payrolls data points to firmer Wall Street open: Dow Jones, S&P, Nasdaq, Futures

U.S. stock futures traded higher ahead of Friday’s opening bell, suggesting markets could recover after weakness in the previous session as investors reacted positively to stronger-than-expected labour market data.

Futures extended gains following the release of the latest U.S. employment report from the Labor Department, which showed hiring accelerated sharply in April.

According to the report, non-farm payrolls increased by 115,000 jobs during the month after March payroll growth was revised higher to 185,000.

Economists had forecast an increase of 63,000 jobs, compared with the originally reported gain of 178,000 in March.

Employment growth was driven primarily by gains in healthcare, retail, transportation and warehousing, while federal government payrolls continued to decline modestly.

The unemployment rate held steady at 4.3 per cent in April, matching both the previous month’s level and analyst expectations.

The stronger jobs figures may help calm fears over the economic fallout from escalating tensions in the Middle East, despite renewed military exchanges between the United States and Iran overnight in the Strait of Hormuz.

Three U.S. destroyers reportedly came under attack from Iranian missiles and drones while moving through the strait. U.S. Central Command said the incoming threats were neutralised and that retaliatory strikes targeted the Iranian facilities linked to the attacks.

During a later phone interview with ABC News correspondent Rachel Scott, President Donald Trump described the retaliatory action against Iran as “just a love tap” and added that the ceasefire agreement remains intact.

Wall Street ended Thursday’s session lower after a subdued start gave way to broader selling pressure later in the day, although declines remained relatively limited.

The Dow Jones Industrial Average lost 313.62 points, or 0.6 per cent, to close at 49,596.97. The S&P 500 declined 28.01 points, or 0.4 per cent, to 7,337.11, while the Nasdaq Composite slipped 32.75 points, or 0.1 per cent, ending at 25,806.20.

Trading sentiment earlier in the session had been supported by optimism that diplomatic negotiations between Washington and Tehran could still prevent a wider conflict, although investors appeared reluctant to take larger positions without clearer signs of progress.

President Donald Trump said on Wednesday that the U.S. and Iran had held “good talks over the last 24 hours” and expressed confidence that an agreement could be finalised within days.

Axios also reported that U.S. officials expect Iran to respond within the next 24 to 48 hours to a proposed memorandum of understanding aimed at ending the conflict.

However, market sentiment weakened as oil prices reversed sharply higher during the day. U.S. crude futures climbed more than 1 per cent in electronic trading after earlier falling as much as 5.5 per cent.

Oil prices rebounded following a CNN report stating that Iran is attempting to require commercial vessels to comply with a new transit protocol in the Strait of Hormuz.

According to CNN, Iran’s newly established Persian Gulf Strait Authority has issued documentation that all vessels must complete before crossing the waterway in order to secure safe passage.

The move was interpreted by markets as an effort by Tehran to formalise control over the strategic shipping route, reviving concerns over a possible escalation in regional tensions.

Additional U.S. economic data released Thursday showed initial claims for unemployment benefits rose less than expected in the week ending May 2.

The Labor Department said first-time jobless claims increased by 10,000 to 200,000 from the prior week’s revised level of 190,000.

Economists had expected claims to rise to 205,000 from the originally reported 189,000.

Sector performance on Thursday was mixed, with technology hardware shares among the weakest performers. The NYSE Arca Computer Hardware Index dropped 2.9 per cent after closing at a record high in the previous session.

Semiconductor stocks also came under pressure, with the Philadelphia Semiconductor Index declining 2.7 per cent.

Energy shares weakened despite the rebound in crude oil prices, while software and airline stocks outperformed the broader market.

Get stock prices from InvestorsHub