Stock index futures suffer continued declines following the release of July employment figures in the United States
U.S. stock index futures extended losses on July 6, 2018, as concerns over renewed trade tensions and a disappointing jobs report clouded the outlook for economic strength and future Federal Reserve policy.
The Dow E-minis experienced a 0.96% decrease, losing 425 points, while the S&P 500 E-minis dropped 1.02%, or 65 points. The Nasdaq 100 E-minis also saw a 1.15% decrease, down 269.75 points.
The jobs report, released by the Labor Department, showed that the U.S. economy added 73,000 jobs in July, which was weaker than the expected 110,000 jobs. The unemployment rate remained steady at 4.2%, as predicted. However, the report's findings indicated a slower job growth rate compared to expectations, raising concerns about the labor market health.
Economists had anticipated a rise in average earnings of 0.3%, which was precisely what was reported. However, the core PCE price index, an inflation indicator, rose, suggesting continued inflationary pressures and reducing the chance of a Fed rate cut soon. This aspect of the report, in combination with the weak jobs growth, raised uncertainty about economic strength and future Federal Reserve policy.
Investors were also reacting to the looming implementation of reciprocal tariffs by the Trump administration, increasing fears of a trade war escalation. Weak earnings forecasts from major companies like Amazon, which dropped about 7% in after-hours trading, also weighed on futures.
Overall market sentiment was affected by ongoing trade uncertainties, including tariffs targeted at multiple countries and sectors, compounding market volatility alongside earnings season factors. The report's findings may impact the U.S. economy's overall health and potentially influence U.S. trade policies.
In summary, the combined impact of tariff announcements and a jobs report that hinted at persistent inflation and less accommodative monetary policy contributed to the extended losses in U.S. stock futures on July 6, 2018.
Concerns about the impact of renewed trade tensions on the stock-market, alongside a disappointing jobs report that indicated slower job growth and persistent inflation, led to investors selling off stocks, with the Dow, S&P 500, and Nasdaq experiencing losses. As a result, finance experts will closely monitor the U.S. economy's overall health and potential adjustments to Federal Reserve policy due to these factors, and may consider these conditions when making future investing decisions.
