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Dow Futures Leap After Blowout Jobs Report; Tesla Gains on Deliveries

The strongest job gains since last August, as well as a coronavirus vaccine rollout that is reaching 4 million Americans a day, has U.S. stock futures on the move Monday.

The Monday Market Minute

  • Global stocks build on April gains following last week's blowout jobs report that could mark a turning point in the U.S. pandemic recovery.
  • Employers added 916,000 new jobs in March, a much higher-than-expected total that tips the headline unemployment rate to 6%.
  • Benchmark 10-year note yields rise to 1.718% following last week's jobs report, with Fed Funds now pricing in a 15% chance of a December rate hike.
  • Oil prices slide as OPEC leaders agree to a gradual increase in production levels by the end of May, with Saudi Arabia phasing out its voluntary cuts by the end of July.
  • CDC data shows 61.5 million Americans have now been fully vaccinated against the coronavirus, with more than 165 million doses administered as of Sunday.
  • U.S. equity futures suggest a firmer open on Wall Street heading into a muted week of economic and corporate releases, with focus soon shifting to second quarter earnings from the banking sector on April 14.

U.S. equity futures moved higher Monday, while bond traders began pricing in a Federal Reserve rate hike by the end of the year, following a blowout March jobs report last week that looks to mark a turning point in the economy's pandemic recovery.

Employers added a much more-than-expected 916,000 jobs last month, the Labor Department said in a rare Good Friday release, tipping the headline unemployment rate to 6%. An upward revision of the February tally, which was finalized at 468,000, added to evidence that state re-openings - aided by an accelerating vaccine rollout - will likely boost hiring in the months ahead.

However, with the economy rolling into a full-fledge spring hiring boom, and consumers fueled by the recent $1.9 trillion American Rescue Act, fixed income markets are growing increasingly concerned over the near-term chances of faster inflation, even as average hourly earnings slowed in last month's jobs report.

Benchmark 2-year Treasury note yields jumped to 0.19% in overnight trading, the highest in 18 months, while the CME Group's FedWatch tool suggested a 16% chance of a Federal Reserve rate hike before the end of the year, up from around 4% at the beginning of last month.

That hasn't dented U.S. equity futures as yet, with contracts tied to the Dow Jones Industrial Average indicating a 245-point opening bell gain and those linked to the S&P 500, which closed above the 4,000-point mark for the first time last week, priced for a 23-point advance.

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Rate moves did, however, hold back Nasdaq Composite futures, which are priced for a modest 55-point bump as benchmark 10-year note yields edged higher, to 1.718%, in holiday-thinned overnight trading.

Tesla  (TSLA) - Get Tesla Inc. Report shares look set to pace premarket gainers after posting forecast-beating first quarter delivery numbers Friday thanks to China demand for its Model 3 sedan, with traders pricing in a 7.7% advance to $712.88 per share.

Oil prices were on the back foot, with WTI crude sliding back towards the $60 mark, after OPEC leaders, as well as non-member allies such as Russia, agreed to gradually increase their collective output by the end of May, a move that will add around 350,000 barrels of oil to the market each day. Saudi Arabia also agreed to phase it out own voluntary cuts, which are taking 1 million barrels from the market each day, by the end of July.

WTI futures contracts for May delivery fell $1.30 overnight to $60.19 per barrel while Brent futures contracts for June, the global benchmark, were last seen $1.41 lower at $63.45 per barrel.

Easter Monday holiday kept most markets in Europe closed for the session, with many in Asia also shut for the traditional Christian observance. 

Japan's Nikkei 225 ended the session 0.79% higher at 30,089.25 points as the yen weakened to a near one-year low of 110.61 against the greenback, while the region-wide MSCI ex-Japan benchmark was little changed from Friday's close heading into the final hours of trading.