Wall Street On 'Wait-And-Watch' Mode Ahead Of Jobs Data, Bitcoin Plummets, Tesla Extends Climb: Analyst Flags 2 Factors That Pose Risk To Rally

U.S. index futures are trading in a listless manner, as traders look ahead to the all-important monthly non-farm payrolls data. ADP’s private payrolls survey showed that job gains slowed more than expected. In the eventuality of the number coming in line or softer than expected, the market’s reaction will likely be positive if traders focus on its implications for rates. Alternatively, if they perceive it to be an added evidence of economic weakness, a sell-off is likely.

A Federal Reserve official issued ambiguous comments in a public appearance on Friday. The central bank has made rapid strides in bringing inflation to the 2% central bank target but it is still “a way” from achieving the goal, New York Federal Reserve President John Williams said in prepared remarks to be delivered at an event at the Reserve Bank of India, Reuters reported. Uncertainty will mark the near-term policy direction, he added.

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY moved up 0.04% to $551.68 and the Invesco QQQ ETF QQQ rose 0.20% to $492.01, according to Benzinga Pro data.

Cues From Last Session:

Wall Street stocks ended Wednesday’s abbreviated session mostly higher as traders digested a slew of data points that underlined the soft patch the economy was going through. ADP private payrolls gains slowed more than expected, jobless claims for the recent reporting week climbed, the Institute for Supply Management’s service sector showed an unexpected contraction, and factory goods orders fell sharply.

Weak data increased the odds of rate cuts, pushing bond yields sharply lower.

The Nasdaq Composite and S&P 500 Index set new intraday and closing records, while the 30-stock Dow Industrials Average witnessed some volatility before ending marginally lower.

Insights From Analysts:

A market strategist recommended active stock picking rather than passive investing amid the market’s strong showing. Morgan Stanley Chief Investment Officer Lisa Shalett does not rule out further gains ahead, especially with the looming U.S. presidential election. But bullish investors may be overlooking key risks, including high equity valuations and a potential downshift in big-tech earnings, she said.

“Traditional ‘safe-haven’ assets and defensive sectors might not be as reliable in today's unpredictable markets,” Shalett said. While actively picking stocks, she advises investors to focus on companies that can achieve expected earnings and potential for growth at a reasonable price.

Upcoming Economic Data:

• The Bureau of Labor Statistics will release the June non-farm payroll numbers at 8:30 a.m. EDT. Economists, on average, expect the economy to have added 200,000 jobs, down from the 272,000 jobs added in May. The unemployment rate may have remained unchanged at 4%. The yearly rate of the average hourly wages – an inflation measure is expected at 3.9%, down from 4.1% in May.

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Stocks In Focus:

• Bitcoin’s BTC/USD plunge weighed down on crypto-linked stocks such as Coinbase Global, Inc. COIN and Robinhood Markets, Inc. HOOD. These stocks fell over 6% and 2.5%, respectively, in premarket trading. Mining stocks Marathon Digital Holdings, Inc. MARA, Riot Platforms, Inc. RIOT, and Canaan Inc. CAN were all sharply lower.
• Tesla, Inc. TSLA remains on track to climb for an eighth straight session.

Commodities, Bonds And Global Equity Markets:

Crude oil futures held up and approached the $84-a-barrel mark and gold futures also traded higher, while the benchmark 10-year Treasury note yield was little changed at 4.337%.

Bitcoin has seen a sharp retreat since Wednesday, with crypto investors likely panicking ahead of Mt. Gox’s $10 billion in bitcoin and Bitcoin Cash BCH/USD repayment starting this week, Coingape reported.

In Asia, equity markets ended on a mixed note, with Hong Kong and Singaporean markets pulling back sharply and the Japanese market ending little changed with a negative bias. On the other hand, the South Korean, Indonesian, Taiwanese, and New Zealand bucked the downtrend. The lackluster mood reflected a lack of lead from Wall Street overnight owing to the Independence holiday and apprehensions ahead of the U.S. jobs data.

European stocks also advanced in early trading, with the U.K.’s FTSE 100 Index traded with a modest gain after it emerged that incumbent and Conservative Party leader Rishi Sunak lost the election, ceding power to Labor Party’s Keir Starmer.

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