Investing.com – After the previous sessions mixed close, Wall Street futures pointed to a slightly higher open on Friday as investors looked ahead to key data on the U.S. labor market that would help gauge the Federal Reserve’s (Fed) outlook on future policy moves.
The blue-chip Dow futures gained 34 points, or 0.19%, by 10:52AM GMT, or 6:52AM ET, the S&P 500 futures rose 5 points, or 0.24%, while the tech-heavy Nasdaq 100 futures advanced 7 points, or 0.16%.
The 2,100 point level in the S&P 500 appeared to be an important barrier this week. After having been surpassed on the prior Friday, the level was lost after the Monday holiday and despite temporary breakouts in intraday highs, the world’s principal stock index has closed each session this week below the key psychological level.
The benchmark may have a chance today with the publication of the U.S. June employment report at 12:30GMT, or 8:30AM ET.
The June report is expected to show the unemployment rate rise slightly to 4.8% despite an estimated increase of 175,000 nonfarm payrolls (NFPs).
May’s reading of 4.7% unemployment was an eight-and-a-half year low, but the rise expected for June is due to forecasts for more workers to return to labor force in search of jobs.
Additionally, wage increases will be in focus for their corresponding expect on spending and secondary effects on inflationary pressure. Consensus forecasts average hourly earnings to rise by 0.2%, but a tightening labor market would presumably place upward pressure on wages.
An upbeat employment report would help support the case for the Fed to steadily tighten monetary policy this year, as the Fed meeting minutes from June noted that one of the primary concerns for holding rates in check were the weak labor market conditions revealed in the May jobs report.
While no one expects a change in interest rates at the Fed’s monetary policy decision on July 27, the focus will be on whether the data-dependent central bank reveals a dovish or hawkish stance.
If Friday’s data shows labor market strength, that could remove one of the obstacles to a continuation of the normalization of U.S. monetary policy, though it is unlikely the Fed will consider enough time has passed for the impact of the Brexit, as the U.K.’s decision to leave the European Union (EU) is known, on the U.S. economy to be measured.
In the meantime, markets put the odds at 96.4% that the central bank would keep rates unchanged at the July 26-27 meeting, with the probability of a 25 basis point (bp) cut at 3.6%.
According to CME Group’s FedWatch Tool, markets do not currently expect the Fed to tighten until well into 2017.
The dollar edged lower against the other major currencies on Friday, as investors awaited the highly-anticipated report on U.S. nonfarm payrolls, briefly putting aside their concerns over the global ramifications of the Brexit vote.
In oil markets, crude bounced back on Friday from a two-month low. Oil fell 5% on Thursday after official data showed a lesser-than-expected draw in U.S. crude stockpiles, putting it on track for a weekly loss of 7%, its largest since January.
Signs of a potential recovery in U.S. drilling activity remained in focus with market players looking ahead to oil services provider Baker Hughes’ data on U.S. rig counts later on Friday.
The number of rigs drilling for oil in the U.S. rose by 11 last week to 341, marking the fourth increase in five weeks, increasing concern over a supply glut stemming from domestic production.
U.S. crude futures gained 0.80% to $45.50 by 10:53AM GMT, or 6:53AM ET, while Brent oil traded up 0.65% to $46.70.
Elsewhere, Asian shares closed mostly lower on Friday with Japan suffering the most from a weaker USD/JPY.
European equities generally added to slight gains at the open during mid-day trade on the Old Continent, with the benchmark Euro Stoxx 50 trading up 0.99% and the DAX gaining 1.16%. However, London's FTSE 100 traded lower as concerns over the British economy in the wake of the EU referendum continued to weigh.