A trader works on the floor of the New York Stock Exchange (NYSE) in New York on August 5, 2021.
Andrew Kelly | Reuters
Stock futures were flat in overnight trading on Sunday after the Dow Jones Industrial Average hit a record close on Friday after a stronger-than-expected job report.
Futures on the Dow added 2 points, or 0.01%. S&P 500 futures fell 0.06% and Nasdaq 100 futures fell 0.13%.
U.S. Senators convened again Sunday to work towards passing a $ 1 trillion infrastructure bill, one of President Joe Biden’s top political priorities. The Senate is due to hold another important procedural vote late on Sunday and vote on the final passage on Tuesday. The bipartisan package is expected to have enough Republican support to pass in the Senate and enter the House for consideration in September.
Movements in futures trading came after the Dow rose 144.26 points, or 0.4%, to hit an all-time high of 35,208.51. The S&P 500 rose 0.17% to hit its own record high of 4,436.52. The Nasdaq Composite bucked the trend and lost 0.4% to 14,835.76. All three major indices ended the week higher, posting their second positive week of three.
The Department of Labor’s employment report on Friday showed that the US economy created 943,000 jobs in July. According to estimates by the Dow Jones, economists expected 845,000 new jobs in the past month. The unemployment rate fell to 5.4% and was thus below the expectation of 5.7%.
“You have seen a lot more jobs have been created in the areas that are reopening – restaurants, hotels, logistics, transportation,” said Larry Adam, Raymond James’ chief investment officer. “That’s a good sign. I think that will give the consumer more purchasing power in the future and I think it’s ultimately a good thing for the economy.”
Signs of a strong economic recovery could lead the Federal Reserve to withdraw its monetary support measures and prepare to taper its bond-buying program.
“If things continue on this scale, the Fed will likely come in a little earlier when it comes to tapering,” Adam said.
The yield on the 10-year benchmark government bond rose to up to 1.3% according to the better-than-expected job report. The 10-year yield has pulled back significantly this summer from its March highs when it approached 1.8%.
The financial sector led to gains on Friday as interest rates rose slightly, increasing banks’ profitability prospects. Industrial, retail and energy stocks also rose as the good jobs report dampened worries about the economic recovery.
Meanwhile, technology stocks fell after the jump. Rising interest rates dampen the value of future earnings and can therefore hit growth stocks such as technology stocks particularly hard.
Investors are waiting for the key inflation data to be released this week. The consumer price index and the producer price index are to be published on Wednesday and Thursday, respectively.
Several Fed officials are scheduled to speak next week, with investors listening carefully for insight into expanding central bank decision-making. Atlanta Fed President Raphael Bostic, Richmond Fed President Thomas Barkin, Chicago Fed President Charles Evans, and Kansas City Fed President Esther George will all speak this week.
Companies like Tyson Foods, AMC Entertainment, Coinbase, Lordstown Motors, Bumble, Palantir, Disney, Airbnb, and DoorDash will all report quarterly earnings this week.