US pre-open: Stocks on course for fresh records ahead of payrolls report
US futures pointed to more records on Wall Street on Friday as market participants looked to the release of the non-farm payrolls report.
At 1210 GMT, Dow Jones Industrial Average and S&P 500 futures were up 0.3%, while Nasdaq futures were 0.4% firmer.
On Thursday, the Dow breached the 25,000 level for the first time and the S&P 500 and Nasdaq also notched record closes.
Oanda analyst Craig Erlam said any concerns about a post-tax reform pull-back in equity markets have quickly been quashed, with indices in the US posting decent gains in the first week of the year as investors anticipate another good earnings season.
"We’ve seen very good earnings growth from companies in the US and Europe in recent quarters and I think the optimism that we’re seeing at the start of the year is potentially being driven by expectations of a similarly positive fourth quarter," he said.
The main focus will be the payrolls release, especially after the ADP report on Thursday blew past expectations. The consensus expectation is for the December non-farm payrolls to rise by 190,000, down from the previous month's 228,000.
David Morrison, senior market strategist at GKFX, said: "If payrolls were to come in around here then we should expect further stock market gains, even as the stronger data raises the likelihood of a faster rate of monetary tightening from the Fed than is currently factored in. Anything below 170,000 would be viewed as disappointing and could be dollar-negative, although it’s unlikely to have much of an adverse effect on equities in the current bullish climate.
"But as always, the devil is in the detail. Traders will also be looking out for revisions to prior months’ data and reacting accordingly. On top of this, Average Hourly Earnings will also come under close scrutiny. These are expected to rise 0.3% from the previous month but have undershot forecasts for two months running now. This is a particular concern for the Fed as this lack of wage pressure makes it harder for the US central bank to hit its 2% inflation target. It also suggests that consumers will continue to be cautious when it comes to future spending. While that’s a perfectly sensible decision as far as individual households are concerned, it won’t help to boost overall economic activity."
Also due on the macroeconomic calendar, the ISM non-manufacturing purchasing managers' index is at 1500 GMT.
On the corporate front, tech giant Apple was a little weaker in pre-market trade after it confirmed that all devices running its mobile and PC operating systems are affected by two major flaws in computer chips.