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U.S. futures slip ahead of payrolls; oil suffers profit-taking

Stock MarketsMay 06, 2016 07:19AM ET
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© Reuters. Wall Street futures point to slightly lower open ahead of employment report – U.S. futures essentially maintained a holding pattern on Friday, pointing to a slighter lower open on Wall Street while waiting for the publication of the monthly employment report.

The blue-chip Dow futures lost 33 points, or 0.19%, by 11:16AM GMT, or 7:16AM ET, the S&P 500 futures gave up 5 points, or 0.23%, while the tech-heavy Nasdaq 100 futures fell 10 points, or 0.23%.

Unlike Asian counterparts that dropped to a one-month low or cautious European investors that cashed out on mixed earnings, Wall Street looked reticent to make big bets ahead of the key U.S. data to be released on Friday at 12:30GMT, or 8:30AM ET.

Economists expected to see the creation of 202,000 nonfarm payrolls (NFP), while the unemployment rate was forecast to remain at 5.0%.

But experts warned of a possible miss to the downside after weekly jobless claims posted their largest increase in more than a year on Thursday, while Challenger job cuts increased in April with 2016 planned layoffs reaching a seven-year high and Wednesday’s ADP report showed the lowest employment creation in three years.

The dollar edged lower in anticipation of the event. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.14% at 93.60, at 11:17AM GMT, or 7:17AM ET.

Meanwhile, investors were digesting a slew of comments from Federal Reserve (Fed) officials that spoke late on Thursday.

Even though Fed funds futures put the chance of a move in interest rates at only 10% and market data suggested that only one rate hike would occur this year, and that in December, four members of the U.S. central bank suggested that a move was still on the table for the next meeting in June.

San Francisco Fed president John Williams stated that two or three would still be reasonable.

Atlanta Fed chief Dennis Lockhart said he was still undecided on the move in June and that his final decision would be data dependent.

The head of the St. Louis Fed, James Bullard, suggested that global headwinds may have dissipated, clearing the way for policy tightening.

Dallas Fed president Robert Kaplan focused on the fact that it was difficult to know how high rates can rise, implying that he is leaning towards a tightening bias.

On Wednesday, Minneapolis Fed president Neel Kashkari had indicated that the Fed will not raise rates again until "the data allows it," he said, without saying what data he would need to see to support a rate hike.

In company news, Warren Buffett’s Berkshire Hathaway, Oppenheimer, Revlon, and Madison Square Garden were among companies scheduled to report earnings.

In oil markets, investors took profits after a rally of around 20% in the last month. West Texas Intermediate was on track to register heavy weekly losses of more than 4%, despite recent concern of supply shortages due to the forest fires in Canada.

Traders would also gauge U.S. oil production later on Friday with the Baker Hughes’ U.S. rig count.

U.S. crude futures dropped 0.61% to $44.05 by 11:16AM GMT, or 7:16AM ET, while Brent oil traded down 0.69% to $44.70.

U.S. futures slip ahead of payrolls; oil suffers profit-taking

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