Stocks May Open Roughly Flat Following Jobs Report - U.S. Commentary

(RTTNews) - After moving sharply higher over the course of the two previous sessions, stocks may show a lack of direction in early trading on Friday. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures up by just 2 points.

The lack of momentum for the markets comes following the release of a closely watched jobs report from the Labor Department that has painted a mixed picture regarding the outlook for monetary policy.

The report said U.S. employment increased by 252,000 jobs in December after jumping by an upwardly revised 353,000 jobs in November. Employment had been expected to climb by about 245,000 jobs.

The stronger than expected job growth helped to push the unemployment rate down to 5.6 percent in December from 5.8 percent in November.

Economists had expected the unemployment rate to dip to 5.7 percent, and the bigger than expected drop pulled the rate down to its lowest level since June of 2008.

While the upbeat data suggests that the Federal Reserve will consider raising interest rates in the near future, the report also showed a slowdown in wage growth.

The report said the annual rate of average hourly earnings growth slowed to 1.7 percent in December, the slowest rate of growth since January of 2012.

Rob Carnell, chief international economist at ING, said, "If you want to raise rates, these numbers provide the ammunition you need in terms of payrolls and the unemployment rate. Historically, the Fed always thought full employment was at about a 5.3% rate."

"Against this, with even less wage inflation than was apparent last month, the doves can argue that the unemployment figures are biased and giving a misleading steer and argue against any near-term increase in rates," he added.

Not long after the open, the Commerce Department is scheduled to release a separate report on wholesale rate in November, although the data is likely to be overshadowed by the jobs report.

Extending the rally seen on Wednesday, stocks moved sharply higher over the course of the trading day on Thursday. The gains on the day further offset the recent pullback by the markets, with the major averages turning positive for the New Year.

The major averages moved roughly sideways going into the close, holding on to substantial gains. The Dow soared 323.35 points or 1.8 percent to 17,907.87, the Nasdaq shot up 85.72 points or 1.8 percent to 4,736.19 and the S&P 500 jumped 36.24 points or 1.8 percent to 2,062.14.