Updated at 8:53AM EST
U.S. stock futures were lower on Friday, even as investors braced for another wash on Wall Street as volatility gauges jumped, the dollar soared and U.S. Treasury yields climbed after a key reading on the domestic jobs market ahead of trading.
In fact, in the past two trading days on Wall Street, U.S. stocks have experienced the largest volatility in more than two years. The S&P 500 index has recorded the largest gain since April 2020. The dovish attitude of the Federal Reserve on Wednesday raised interest rates by 50 basis points, and the Dow Jones index plummeted on Thursday. More than 1,000 points, the biggest one-day drop since October 2020.
More of the same was likely on Friday, with the CBOE benchmark VIX up 29.4% to 32.89, its highest level since early March.
A string of Fed speakers later today – including John Williams, Neil Kashkari and Ralph Bostic, all scheduled to speak publicly before the close of trading – will also increase Uncertainty embedded in the market.
Fed governors need to avoid serious investor concerns about the credibility of Fed Chairman Jerome Powell, who sparked Wednesday’s rally in part by stressing that the central bank is not “actively considering” a 75 basis point rate hike in June. However, CME Group’s FedWatch tool shows that interest rate traders see a 91.5% chance of such a move in six weeks’ time.
That pushed the U.S. dollar index, which tracks the greenback against a basket of six global currencies, to a fresh 20-year high of 100.04 in overnight trade, while the yield on the benchmark 10-year U.S. Treasury note hovered at its highest level in three and three years. – Half a year, the last transaction price was 3.099%.
Oil also resurfaced after hitting a five-week high yesterday as cartel members worried about a slump in Chinese demand linked to the ongoing coronavirus crisis, after the Organization of the Petroleum Exporting Countries decided to maintain its path of only modest output increases in the coming months.
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WTI futures for June delivery rose $2.07 to $110.33 a barrel, while July Brent crude rose $2.25 to $113.12 a barrel.
The sell-off on Wall Street overnight extended the S&P 500’s year-to-date losses to around 13%, spreading rapidly during the Asian session, with the region-wide MSCI ex-Japan index down 2.77%. European stocks were only marginally better, with the Stoxx 600 down 1.34% in Frankfurt morning trade and the FTSE 100 in London down 0.88%.
Back on Wall Street, futures contracts tied to the Dow Jones Industrial Average pointed to a 110-point drop at the open after a better-than-expected April jobs report at 8:30 a.m. ET
The U.S. economy added slightly more jobs than expected last month, while wage growth slowed, the Labor Department said on Friday, suggesting the Federal Reserve’s efforts to stabilize the labor market by raising interest rates are beginning to bear fruit.
The U.S. Bureau of Labor Statistics said 428,000 jobs were added in April, and the overall unemployment rate remained at a post-pandemic low of 3.6%. Wages rose 0.3% this month and 5.5% year over year to $31.75 an hour, a figure that could ease concerns about the pace of wage increases, the BLS noted.
Futures, tied to the S&P 500, fell 20 points. Futures tied to the tech-focused Nasdaq were looking for an 80-point opening drop.
Boeing (BA) – Get Boeing Reports Shares were an interesting first mover, rising 0.15% after the world’s largest planemaker said it would move its corporate headquarters to suburban Washington, D.C.
Zillow ZG shares fell 10% after the online real estate platform forecast near-term earnings below expectations amid a surge in residential mortgage rates that could trigger a broader slowdown in the housing market.
Meanwhile, DoorDash DASH shares rose 7% after the food delivery specialist reported stronger-than-expected first-quarter sales and issued a near-term outlook for strong customer orders and overall activity.