LIVE MARKETS-US stock futures red, yields slide, after latest jobs data

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U.S. STOCK FUTURES RED, YIELDS SLIDE, AFTER LATEST JOBS DATA

The main U.S. equity index futures are lower ahead of the open on Friday. The latest data on U.S. employment has done nothing to alter that picture.

E-mini S&P 500 futures EScv1 are down around 1% vs a loss of around 0.9% just before the data came out. The futures were already sharply lower after President Trump announced sweeping new tariffs.

The July nonfarm payroll headline jobs number was 73k vs the Reuters Poll calling for 110k. The prior headline jobs read for June was revised down to 14k from 147k.

The June unemployment rate was 4.2% vs a 4.2% estimate. The prior read was 4.1%.

Wage data, on a month-over-month basis was in line with the estimate. The year-over-year number was hotter-than-expected.

According to the CME's FedWatch Tool, the probability that the Fed cuts rates 25 basis points at its September 16-17 FOMC meeting has risen to around 63% vs 41% just before the data was released. The chance that the FOMC leaves its current target rate of 4.25-4.50% unchanged has fallen to about 37% from 59%.

Looking further out into 2025, the market is now showing a bias for another rate cut in December. Through year-end, interest rate probabilities are now calling for a total of around 51.1 basis points of cuts vs 34.5 bps just before the data was released.

The U.S. 10-Year Treasury Yield US10YT=RR is now around 4.27%. It was around 4.40% just before the numbers came out. The yield ended Thursday at 4.36%.

Most S&P 500 index .SPX sector SPDR ETFs are quoted down in premarket trade with Consumer Discretionary XLY.P, off more than 2%, taking the biggest hit. This, with Amazon.com AMZN.O tumbling ahead of the open after its quarterly report.

Tech XLK.P is also quoted lower despite Apple AAPL.O rising after its earnings release.

Staples XLP.P and Healthcare XLV.P are the only gainers.

The SPDR Regional Banking ETF KRE.P is down more than 1.5%.

Regarding the jobs data, Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said:

"If Powell knew then what he knows now, maybe even he would have dissented from the decision to continue the rate cut pause. There’s no way to pretty-up this report. Previous months were revised significantly lower where the labor market has been on stall-speed."

"History is repeating itself. Last year the Fed messed up by not cutting in July so they did a catch-up cut at their next meeting. They’ll likely have to do the same thing this year."

The July ISM manufacturing PMI is due at 10:00 a.m. EDT. The expectation is for 49.5 vs 49.0 last time. Prices paid is forecast to be 70.0 vs the prior read of 69.7. Final July U Mich sentiment is expected to come in at 62.0 vs 61.8 last time. The expectation for June construction spending is for a 0.0% change vs a 0.3% decline the month before.

Here is a premarket snapshot from around 08:53 a.m. EDT:

(Terence Gabriel, Chuck Mikolajczak)

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