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U.S. stock-index futures were wavering on Friday, a day after stocks suffered a blistering bout of selling, particularly in technology and other highflying sectors as investors appetite waned.
The U.S. Labor Department’s monthly employment report due early Friday could provide a fresh catalyst for an anxious equity market that has grown jittery over stretched valuations in the wake of the rally to new records in recent months despite the coronavirus pandemic.
Read: U.S. likely added 1.2 million job in August, economists say, but hiring has slowed
How are stock-market benchmarks performing?
Futures for the Dow Jones Industrial Average YM00, -0.02% YMU20, -0.02% were up 96 points, or 0.3%, at 28,449, those for the S&P 500 ES00, -0.37% ESU20, -0.37% were virtually unchanged at 3,460, while Nasdaq-100 futures NQ00, -1.54% NQU20, -1.54% were off 133.50 points at 11,667, a decline of 1.2%.
On Thursday, the Dow DJIA, -2.77% DJIA, -2.77% ended with a loss of 807.77 points, or 2.8%, at 28,292.73, after dropping more than 1,000 points at its session low. The S&P 500 SPX, -3.51% closed 125.78 points lower, down 3.5%, at 3,455.06. The Nasdaq Composite COMP, -4.96% tumbled 598.34 points, or 5%, to end at 11,458.10. The declines marked the biggest one-day drops for all three indexes since June.
The fall came a day after the S&P 500 claimed its 22nd record close of the year, while the tech-heavy Nasdaq Composite arrived at its 43rd such all-time high and the Dow topped the 29,000 level for the first time since February. Thursday’s fall snapped a four-day win streak for the Nasdaq and a 10-day run of gains for the S&P 500’s tech sector.
In One Chart:Tech stocks and the rest of the market are both very expensive — but for very different reasons
What’s driving the market?
After the worst single-day selloff since June, market participants on Friday are waiting for a the most important data point of the week, ahead of an extended U.S. holiday weekend, with markets closed for Labor Day on Monday.
The Labor Department jobs report may show that the U.S. added about 1.2 million new jobs last month, based average estimates of economists surveyed by MarketWatch. That would mark a sizable drop from 1.76 million in July and 4.8 million in June, suggesting the recovery from the pandemic is losing momentum.
The official jobless rate is seen ticking down to 9.8% from 10.2%, but a lower unemployment rate could reflect millions of Americans dropping out of the labor force as they cease looking for work amid the pandemic.
The report on the jobs market has the potential to stoke a renewed round of selling in markets that some have considered overstretched for weeks. However, some market bulls believe that Thursday’s downturn wasn’t indicative of a broader unraveling of the overall upbeat momentum for equities.
Peter Cardillo, chief market economist at Spartan Capital Securities, said “we don’t think yesterdays plunge will turn into meaningful correction.”
“In other words, yesterdays decline is likely to be short lived as rotation maybe unfolding,” he said.
That said, some market player see Thursday’s moves as just the start of a purge of excess on Wall Street after equities surged to records following coronavirus-induced lows in late March.
“Diminishing breadth, the weakest seasonal period of the year (even for election years), over extended rallies in specific mega-cap names, and an approaching presidential election that brings great uncertainty are all likely reasons for yesterday’s plunge in the market,” wrote Jeff deGraaf, founder of Renaissance Macro, in a Friday research note.
