Stock futures opened higher Thursday evening as investors looked ahead to a key report on the U.S. labor market recovery at the end of a volatile week. Contracts on the S&P 500, Dow and Nasdaq gained as the overnight session began.
On Friday, investors are set to receive the Labor Department's December jobs report, providing an update on the extent to which labor supply shortages were still impacting the economy at the end of last year. Economists expect to see more than 400,000 non-farm payrolls came back last month — or a figure double that from November — as the unemployment rate and labor force participation rates each improved modestly compared to the previous month. However, many pundits cautioned that a more recent hit to the labor market from the surge in Omicron cases may not yet be captured in the December report.
Heading into this print, U.S. stocks have come under pressure over the past couple sessions as investors reassessed the next likely moves by Federal Reserve. And with policymakers closely watching for signs that the economy has reached maximum employment, a strong jobs report could provide additional fodder for the Fed to double down on its more hawkish tilt.
The Fed's December meeting minutes released earlier this week suggested some officials were inclined to speed their asset-purchase tapering and move up the timing of an initial interest rate hike from current near-zero levels. And in a surprise development to many market participants, some officials also suggested they were contemplating the start of reducing the nearly $9 trillion in assets on the central bank's balance sheet. Such a move would quickly shift the markets away from the accommodative monetary policy backdrop that helped underpin risk assets during the pandemic.
“The way I view it is very simple: The Fed delivered a wonderful year for markets in 2021, at the cost of a much more complicated outlook in 2022," Mohamed El-Erian, president of Queens' College at Cambridge University and Allianz Chief Economic Adviser, told Yahoo Finance Live on Thursday. "And that complicated outlook is for policy, is for the economy, and therefore is a more uncertain outlook for markets."
“This is still a very robust economy,” he added. “If we avoid a policy mistake — big if. But if we avoid a policy mistake, this economy has all the ingredients to continue growing and grow in a more inclusive manner. But we do need help on labor force participation and productivity. We do need help on the supply side.”
And despite this week's volatility, some pundits struck an upbeat tone about future near-term catalysts for the market.
"Within the U.S., we're hopeful for fourth-quarter earnings. We think [they] should be fairly good," Rob Haworth, U.S. Bank Wealth Management senior investment strategist, told Yahoo Finance Live on Thursday. "That said, the market does have to adjust to what is a surprise in terms of how aggressive the Federal Reserve may be in managing the economy around inflation."
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6:31 p.m. ET Thursday: Stock futures drift ahead of jobs report
Here were the main moves in markets during the overnight session:
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S&P 500 futures (ES=F): +9.5 points (+0.2%), to 4,697.00
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Dow futures (YM=F): +57 points (+0.16%), to 36,180.00
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Nasdaq futures (NQ=F): +45.25 points (+0.29%) to 15,804.25
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
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