Here are five things you must know for Friday, April 1:
1. — Stock Futures Higher As Jobs Report Looms, Bonds Flash Recession Warning
U.S. equity futures moved higher Friday, following on from the worst quarterly performance for the S&P 500 in at least two years, as investors tracked movements in the bond market, as well as headline risk from Europe, ahead of today’s crucial March employment report.
The spread between 2-year and 10-year Treasury note yields, which inverted for a second time this week during the Thursday afternoon session, eased to around 2.3 basis points in overnight trading, but the market’s go-to recession warning continues to flash red.
Global factory activity, in fact, may justify some of the bond market’s concerns, with S&P Global’s final reading for Europe falling to a 14-month low in March, with declines in major economies recorded in Asia as well.
Sentiment in Europe was also hit by a record high reading for regional inflation, which accelerated to 7.5% last month, adding further pressure to the European Central Bank’s accommodative stance on interest rates.
Staying in Europe, Russian President Vladimir Putin’s deadline for payment of natural gas exports in rubles came and went Friday, with supplies reportedly still flowing into Germany and elsewhere, while another round of peace talks between Moscow and Kyiv, this time via video link, was scheduled for later today.
On Wall Street, futures contracts tied to the Dow Jones Industrial Average indicating a 220 point opening bell gain while those linked the S&P 500, which ended the first quarter with a 4.95% decline, are are priced for a 28 point gain. Futures linked to the tech-focused Nasdaq are looking at a 105 point opening bell advance.
2. — March Jobs Report Expected to Show Slowing Growth, Higher Wages
The U.S. economy likely added nearly half a million new jobs last month, with wages regaining some acceleration as companies ramp-up hiring in the hospitality and leisure sectors following the end of Covid restrictions on business and travel.
The Bureau of Labor Statistics is expected to report a headline tally of 490,000 new jobs for the month of March, with unemployment dipping to 3.7%. Average hourly earnings, which were flat last month, will likely accelerate by 0.4%, with this week’s JOLTS report suggesting higher wages are needed to fill the near-record 11.2 million positions that remain open in the world’s biggest economy.
The wage portion of today’s reading could be crucial, however, especially if the headline jobs reading — which is already likely to slow from the 678,000 tally recorded in February — comes in shy of forecasts, as investors may see further suggestions of stagflation (slowing growth with higher inflation) as the U.S. Treasury bond yield curve inverts and GDP forecasts are revised downward.
3. — Oil Prices Edge Higher Following Biden’s Historic SPR Release
Global oil prices crept higher Friday, after U.S. crude fell below the $100 per barrel mark in overnight trading, following President Joe Biden’s historic move to release 180 million barrels from the Strategic Petroleum Reserve.
Biden’s move, the biggest on record, will add 1 million barrels of crude to the market each day, spread over six months, as part of his administration’s effort to reduce the impact on gas and energy prices from Russia’s war on Ukraine.
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“This is a moment of consequence and peril for the world, and pain at the pump for American families, but it’s also a moment of patriotism,” Biden said.
U.S. allies could follow Biden’s move, which is the equivalent of around two days of global supply, following a meeting of International Energy Agency member nations later today.
WTI crude futures for May delivery were marked 8 cents higher from Thursday’s close at $100.60 per barrel in overnight trading, while Brent contracts for June, the new global pricing benchmark, rose 70 cents to trade at $105.45 per barrel.
4. — GameStop Shares Soar As Retailer Plans Stock Split
GameStop said the split, which will broadly raise the number of Class A shares from 300 million to 1 billion, would allow for “flexibility for future corporate needs” for the Grapevine, Texas-based group. The plan will be put to shareholders at its annual general meeting later this year.
It also capitalizes on the meme-stock’s recent resurgence — even amid another losing quarter — which has taken the shares more than 110% higher over the past three weeks.
Late last month, Securities and Exchange Commission filings showed that GameStop chairman Cohen’s RC Ventures LLC, which has also built stakes in Bed Bath & Beyond (BBBY) – Get Bed Bath & Beyond Inc. Report, now owns around 9.1 million GameStop shares representing an 11.9% overall stake in the Grapevine, Texas-based group.
GameStop shares were marked 15.3% higher in pre-market trading to indicate an opening bell price of $192.11 each.
5. — Dell Shares Slide As Goldman Sachs Drops It From Conviction List
Goldman analyst Rod Hall said value from the group’s spin-off of tis cloud computing division VMWare last year has already been unlocked, and weakness in PC markets, as well as a slowdown in corporate IT spending, were enough to remove Dell from Goldman’s ‘conviction buy’ list. Hall cut his rating on Dell to ‘neutral’ and lowered his price target by $7, to $61 per share.
“We continue to believe Dell remains inexpensive compared to its peers, but we see increasing fundamental headwinds hindering this value unlock,” Hall said. “We note that PC demand has already moderated for low end consumers, and we expect higher end demand to inflect by the end of this year.”
“These demand trends could be exacerbated on the negative side by increasing pressure on the consumer economy driven by inflation,” he added.
Dell shares were marked 0.8% lower in pre-market trading to indicate an opening bell price of $49.78 each.