Stock futures advance as investors assess October payroll data

U.S. stock futures gained Friday morning as traders assessed monthly employment figures and weighed talk that China might ease COVID restrictions.

Futures contracts linked to the S&P 500 (^GSPC) rose 0.8%, while futures on the Dow Jones Industrial Average (^ DJI) added almost 200 points, or 0.6%. Contracts on the technology-focused Nasdaq Composite (^IXIC) increased by 0.8%.

The American Economy added 261,000 jobs in October, while the September reading was revised higher to 315,000 from the previously reported 263,000, the Labor Department said on Friday. Economists had expected a payroll gain of 195,000 last month, according to consensus estimates compiled by Bloomberg.

Investors bet that signs of a cooling labor market would force the Federal Reserve to scale back its aggressive rate hike campaign, but President Jerome Powell said on Wednesday that slight moderations in the data were not enough for a pause on increases, with working conditions still historically tight.

“Although job vacancies have fallen below their peaks and the pace of job gains has slowed since the start of the year, the labor market continues to be unbalanced, with demand far outstripping supply for available workers,” Powell said on Wednesday after the U.S. central bank issued a fourth straight interest rate hike of 75 basis points.

In the third quarter of this year, payroll gains averaged 372,000 per month. Weekly jobless claims, the most current snapshot of the U.S. labor market, have also been consistently weak, with this week’s reading at 217,000.

“Initial claims are not increasing at all,” DataTrek’s Nicholas Colas said in a note. “Put simply, there is still no sign that either the Fed’s aggressive monetary policy or the tightening of financial conditions it has brought about are still hitting U.S. labor markets.”

Central banks around the world have followed suit with the US Federal Reserve in pursuing a combative course of monetary tightening, raising concerns about the impact of synchronized rate hikes. The Bank of England raised interest rates by 75 basis points on Thursday, while European Central Bank President Christine Lagarde said in recent remarks that rates may need to be raised to restrictive levels to bring inflation back to the 2% target.

As monetary policy captured investors’ attention this week, corporate earnings continued to climb. Block Actions (SQ) jumped 13% in premarket trading after the company significantly beat estimates on the strong performance of its Cash App and Square payment offerings.

PayPal Peer Payments (PYPL), meanwhile, saw its shares fall 7% for extended hours after the company cut its revenue forecast to 8.5% from its earlier outlook of 18%, even as it beat its results.

Meanwhile, Alibaba’s shares (BABA) jumped 10% with a rally in Chinese stocks amid speculation that the country will end its strict zero-COVID policy.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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