Traders on the NYSE floor, February 24, 2022.
Source: NYSE
Futures fell on Thursday night ahead of a key jobs report as investors kept an eye on developments in the war in Ukraine.
Futures tied to the Dow Jones Industrial Average fell about 430 points, or 1.28%. The S&P 500 index fell 1.18%, while Nasdaq 100 futures fell 1.27%.
Stock futures turned negative on Thursday night after reports that smoke was visible from a nuclear power plant in Ukraine – the largest nuclear power plant in Europe – after military Russian team attack. The situation in Ukraine is rapidly deteriorating and reports from the country are difficult to confirm.
The moves come ahead of the Labor Department’s February jobs report. Economists surveying Dow Jones expect 440,000 job growth and a fall in the unemployment rate to 3.9%. Hourly wages are expected to increase by 5.8% year-on-year.
This is the last jobs report before the next meeting of the Federal Reserve, where the central bank is expected to start raising interest rates. Fed Chairman Jerome Powell said on Wednesday that he leaning towards support a 25 basis point rally March. The basis point is equal to 0.01%.
“I think because we’ve seen Powell say, in an unusually frank way, specifically saying that the plan supports a 25 basis point rally, the speculative thinking might be anchored a little bit more at the level.” up 25 basis points even if we see stronger gains – better-than-expected report tomorrow,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments .
The wage growth component of the report could be a key data point as traders try to figure out the policy path for the road, Goodwin said.
“Even a 5.8 percent wage increase is a pay cut if inflation rises above 7%,” says Goodwin.
The war in Ukraine will also be in focus for investors on Friday. Ukraine kept its capital, Kyiv, in place for more than a week of fighting, although reports of shelling have increased in other major cities. One million Ukrainians have fled the countryaccording to the United Nations.
Meanwhile, economic sanctions from the US and its allies have effectively cut off the Russian economy from large parts of the global financial system. JPMorgan said in a note on Thursday that the Russian economy could shrink 35% at an annual rate in the second quarter.
Energy prices have spiked since the invasion, though they cooled down a bit during Thursday’s trading session. U.S. benchmark West Texas Intermediate crude futures were slightly higher at around $109 a barrel on Thursday night.
The earnings report prompted some big moves in extended trading. Retailer distance and the Sweetgreen restaurant chain both rallied after beating expectations. Chipmaker Broadcom rose after outperforming earnings and revenue estimates.
On Thursday, three major averages close lower after a swinging session. The Dow was fairly positive for most of the day before closing 96 points lower. Nasdaq, dragged down by software shares, fell 1.56%.
The Dow fell 0.9% for the week, on track for a fourth straight weekly decline. The S&P 500 is down about 0.5% for the week, while the Nasdaq Composite is down more than 1%.
