Stock Futures Rise Modestly Before Crucial Jobs Report

Stock Futures Rise Modestly Before Crucial Jobs Report

U.S. stock index futures have risen in anticipation of the Labor Department's employment report, expected to show a rise in non-farm payrolls by 190,000 in June, down from the 272,000 jobs added in May. The unemployment rate is projected to remain steady at 4%, and average hourly earnings are forecast to increase by 0.3%. These factors contribute to a tight labor market, complicating the Federal Reserve's ability to justify rate cuts.

Despite the tight labor market, other indicators suggest easing conditions. The ADP Employment report and weekly jobless claims have shown signs of a cooling labor market, and a measure of services sector activity has dropped to a four-year low. Additionally, factory orders have slumped unexpectedly. Consequently, market participants have increased their bets on a rate cut, with the likelihood of a 25-basis-point reduction in September rising to 68% from 58%. Treasuries have also risen, and two-year yields have dropped three basis points to 4.69%, reflecting expectations of monetary policy easing.

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