LIVE MARKETS-US stock futures rally, yields jump, after hot jobs data

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US STOCK FUTURES RALLY, YIELDS JUMP, AFTER HOT JOBS DATA

U.S. equity index futures are higher after the release of what had been a delayed January nonfarm payroll report due to the recent brief federal government shutdown.

E-mini S&P 500 futures EScv1 are now up around 0.6% vs. a gain of about 0.2% just before the numbers came out.

The January headline jobs number came in at 130,000 vs. a 70,000 estimate. The prior read was revised to 48,000 from 50,000.

The unemployment rate was 4.3% vs. a 4.4% estimate, and a 4.4% prior reading. Average hourly earnings on a month-over-month and year-over-year basis were hotter than expected.

According to the CME's FedWatch Tool, the probability that the Fed sits on its hands and leaves its current target rate of 3.50%-3.75% unchanged at its March 17-18 FOMC meeting is now at around 94% vs. 78% just before the data was released. The chance that the FOMC cuts rates by 25 basis points is now around 6% vs. 22%.

Interest rate probabilities are now pricing in a total of 50.5 basis points (bps) of cuts through December 2026 vs. 58.6 bps just before the data came out.

The U.S. 10-Year Treasury Yield US10YT=RR is now around 4.20%. It was around 4.13% just before the data came out. The yield ended Tuesday at 4.145%.

A majority of S&P 500 .SPX sector SPDR ETFs are quoted up in premarket trading. Tech XLK.P, Energy XLE.P, and Industrials XLI.P, all up around 1% or more, are the leading gainers. Real Estate XLRE.P, Healthcare XLV.P and Staples XLP.P are slipping.

The State Street Regional Banking ETF KRE.P is up around 0.7%.

Regarding the jobs data, Robert Edwards, chief investment officer at Edwards Asset Management based in Naples, FL, said:

"Wednesday's delayed jobs report for January was much better-than-expected, which suggests that the labor market is recovering from its hiccups over the past six months. The economy is still churning out jobs, and there is little reason to be concerned about the labor market."

Edwards adds, "Wednesday's labor report is unlikely to change anything for the Federal Reserve, which is likely on pause when it comes to any further rate cuts until there is a new Fed Chair."
"We expect some volatility and a 5–15% pullback this year, but I’m sticking to our thesis of a sawtooth pattern year with a year-end rally lifting us to a target of S&P 7,700 and Dow 55,000."

Here is a premarket snapshot from around 8:54 a.m. ET:

(Terence Gabriel, Karen Brettell)

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