Futures Pointing To Initial Strength On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to regain ground following the sell-off seen over the course of the previous session.

Traders may look to pick up stocks are reduced levels after the steep drop seen on Thursday, which renewed the sell-off seen on Tuesday.

The sharp decline on the day dragged the Dow down to a four-month closing low, while the S&P 500 hit its lowest closing level in well over a month.

The futures moved to the upside following the release of a closely watched Labor Department showing employment in the U.S. jumped by much more than expected in the month of February.

The Labor Department said non-farm payroll employment shot up by 311,000 jobs in February after spiking by a revised 504,000 jobs in January.

Economists had expected employment to increase by 205,000 jobs compared to the surge of 517,000 jobs originally reported for the previous month.

Despite the stronger than expected job growth, the report said the unemployment rate rose to 3.6 percent in February from 3.4 percent in January. The unemployment rate was expected to be unchanged.

While the report signals continued labor market tightness, which has been flagged by the Federal Reserve as a source of inflation, the data may add to hopes of a "soft landing" for the economy.

Traders may also feel that recent concerns about the outlook for interest rates have been price into the markets, allowing them to pick up stocks at reduced levels.

After failing to sustain an early move to upside, stocks moved sharply lower over the course of the trading session on Thursday. The major averages renewed the sell-off seen on Tuesday, with the Dow tumbling to its lowest closing level in four months.

The major averages climbed off their worst levels going into the close but still posted steep losses. The Dow slumped 543.54 points or 1.7 percent to 32,254.86, the Nasdaq plummeted 237.65 points or 2.1 percent to 11,338.35 and the S&P 500 plunged 73.69 points or 1.9 percent at 3,918.32.

The early strength on Wall Street came following the release of a report from the Labor Department showing initial jobless claims rose by more than expected in the week ended March 4th.

The report said initial jobless claims climbed to 211,000, an increase of 21,000 from the previous week's unrevised level of 190,000. Economists had expected jobless claims to inch up to 195,000.

With the bigger than expected increase, jobless claims reached their highest level since hitting 223,000 in the week ended December 24th.

The data helped ease concerns about labor market tightness, which the Federal Reserve has pointed to as a reason for stubbornly elevated inflation.

Buying interest waned shortly after the start of trading, however, as traders look ahead to the release of the Labor Department's more closely watched monthly jobs report on Friday.

Economists currently expect employment to jump by 203,000 jobs in February after surging by 517,000 jobs in January, while the unemployment rate is expected to hold at 3.4 percent.

"Fed Chair Powell seems to have signaled they will accelerate the tightening pace to a half-point rate rise if we get both a hot NFP and inflation reports," said Edward Moya, senior market analyst at OANDA.

He added, "Some traders are thinking that if tomorrow delivers a not-so-hot jobs report, that we could see Fed fund futures lean towards a quarter-point rate rise for the March 22nd FOMC meeting."

Banking stocks moved sharply lower over the course of the session, dragging the KBW Bank Index down by 7.7 percent to its lowest closing level in almost five months.

Substantial weakness also emerged among oil service stocks, as reflected by the 4.2 percent nosedive by the Philadelphia Oil Service Index. The sell-off by oil service stocks came amid a notably decrease by the price of crude oil.

Brokerage stocks also showed a significant move to the downside on the day, resulting in a 4.1 percent plunge by the NYSE Arca Broker/Dealer Index. The index ended the session at its lowest closing level in well over a month.

Steel, chemical and commercial real estate stocks also came under pressure as the day progressed, moving lower along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are falling $0.38 to $75.34 a barrel after slumping $0.94 to $75.72 a barrel on Thursday. Meanwhile, after climbing $16 to $1,834.60 an ounce in the previous session, gold futures are rising $7.80 to $1,842.40 an ounce.

On the currency front, the U.S. dollar is trading at 136.05 yen versus the 136.15 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0629 compared to yesterday's $1.0581.

Asia

Asian stocks tumbled on Friday amid concerns about the health of the U.S. banking sector and anxiety ahead of the all-important U.S. jobs data due later in the day that could set the tone for the U.S. interest rate outlook.

Silicon Valley Bank shares plunged 60 percent overnight after the tech-focused U.S. bank said it would raise $2 billion in additional capital to offset losses on bond sales, raising concerns about its solvency.

Earlier in the week, crypto-focused U.S. bank Silvergate said it would wind down operations following a bank run prompted by regulatory concerns.

The Japanese yen weakened after the Bank of Japan maintained its easy-money policy, as widely expected.

Gold edged up slightly on fears of an economic downturn or recession, while oil prices fell about 1 percent to extend declines for a fourth day running on demand concerns.

Treasury yields eased after data showed the number of Americans filing new claims for unemployment benefits increased more than expected last week.

Chinese shares fell sharply, with the benchmark Shanghai Composite Index ending down 1.4 percent at 3,230.08. Hong Kong's tech-heavy Hang Seng Index plunged 3.0 percent to close at 19,319.92.

Japanese stocks fell the most in three months, with banks and insurers suffering heavy losses as the country's central bank kept its controversial yield curve control program unchanged ahead of a leadership transition in April.

The Nikkei 225 Index gave up 1.7 percent to close at 28,143.97, snapping a five-day winning streak. The broader Topix ended 1.9 percent lower at 2,031.58.

Resona Holdings plummeted 7.5 percent and Mitsubishi UFJ Financial Group shed 6.1 percent. Seven & i Holdings tumbled 5.9 percent after the retail giant announced it would close a quarter of its main supermarket and general merchandise outlets.

Japanese producer prices rose last month, but the pace of growth slowed from the previous month due to slowing energy cost growth, central bank data showed earlier in the day. Separate data revealed Japanese household spending fell 0.3 percent in January from a year earlier.

Seoul stocks ended lower as data showed the country logged a record high current account deficit in January. The Kospi average finished 1.0 percent lower at 2,394.59 on lingering fears over faster rate hikes by the U.S. Federal Reserve.

Australian markets suffered their worst drop since September, with miners and financials leading losses. The benchmark S&P/ASX 200 Index dove 2.3 percent to 7,144.70, marking an eight-week low. The broader All Ordinaries Index settled 2.2 percent lower at 7,348.20.

Piedmont Lithium slumped 6.3 percent after responding to a critical report by a short seller, Blue Orca Capital.

Origin Energy rose 2.5 percent on reports that Brookfield Asset Management and EIG Partners could submit a binding $18.2 billion takeover offer for the energy retailer as early as next week.

Europe

European stocks have tumbled on Thursday as investors assess the potential fallout from the implosions of Silicon Valley Bank and Silvergate Capital.

While the U.K.'s FTSE 100 Index has plunged by 1.9 percent, the German DAX Index and the French CAC 40 Index are down by 1.4 percent and 1.3 percent, respectively.

Commerzbank, Deutsche Bank, BNP Paribas, Societe Generale, Credit Agricole, Barclays, Lloyds, Standard Chartered and Natwest have moved sharply lower after SVB Financial Group, which specializes in venture-capital financing, announced it had suffered significant losses on its portfolio.

Separately, crypto banking giant Silvergate said it planned to close as the sector faces more turmoil, raising concerns about the wider financial sector.

Sandvik AB, a Swedish engineering firm, has also come under pressure. The company has decided to invest in a new production unit in Malaysia with an investment of SEK 350 million over the next three years.

In economic news, Germany's consumer price inflation held steady in February, as initially estimated, the latest data from Destatis showed.

The consumer price index climbed 8.7 percent year-over-year in February, the same increase as in January. That was in line with the flash data published on March 1.

France's foreign trade deficit decreased at the start of the year as imports fell faster than exports, separate data from the customs office showed.

The trade deficit dropped to EUR 12.9 billion in January from EUR 14.7 billion in December.

U.S. Economic Reports

A closely watched report released by the Labor Department on Friday showed employment in the U.S. jumped by much more than expected in the month of February.

The Labor Department said non-farm payroll employment shot up by 311,000 jobs in February after spiking by a revised 504,000 jobs in January.

Economists had expected employment to increase by 205,000 jobs compared to the surge of 517,000 jobs originally reported for the previous month.

Despite the stronger than expected job growth, the report said the unemployment rate rose to 3.6 percent in February from 3.4 percent in January. The unemployment rate was expected to be unchanged.