By Shashwat Chauhan and Purvi Agarwal
(Reuters) – Wall Street was on track for marginal gains at Friday’s open as traders increased bets on a Federal Reserve rate cut this month after the November payrolls report.
U.S. job growth surged in November after being severely constrained by hurricanes and strikes, but this probably does not signal a material shift in labor market conditions, which continue to ease steadily and would allow the Fed to cut interest rates again this month.
“This type of report gives the market room to assume that (the rate-cut) trajectory will be more gradual than previously expected,” said Keith Buchanan, partner and senior portfolio manager at Globalt Investments.
“We have a 25-basis-point cut baked in for December. As we draw closer to the (Fed) meeting, unless there is something really disruptive, the odds will continue to tick higher.”
Traders boosted bets that the U.S. central bank will cut interest rates this month, now signaling a more than 85% chance of a 0.25-percentage-point rate cut at the Fed’s upcoming Dec. 17-18 meeting, versus 67% before the release of the jobs report.
A preliminary reading of December U.S. consumer sentiment calculated by the University of Michigan is also due shortly after markets open on Friday.
Four Fed officials including San Francisco President Mary Daly and Governor Michelle Bowman are scheduled to make public appearances throughout the day, on the eve of a media blackout that kicks in on Saturday in the run-up to the central bank’s Dec. 17-18 policy meeting.
U.S. stocks closed lower in the last session, with UnitedHealth (NYSE:) down sharply and technology shares giving up some gains after a steady increase through the week.
Despite Thursday’s pullback, the and the Nasdaq were on track for their third consecutive weekly gains, while the blue-chip Dow was set for minor losses.
The three indexes are hovering near record highs as a relentless rally in heavyweight tech stocks – a bid to cash in on the euphoria around artificial intelligence – led to robust gains throughout this year.
U.S. President-elect Donald Trump’s win in the Nov. 5 election has been another recent tailwind for stocks. Analysts expect his tax-cut policies and looser regulations could support corporate performance.
At 08:51 a.m. ET, Dow E-minis were up 24 points, or 0.05%, S&P 500 E-minis were up 4.25 points, or 0.07%, and E-minis were up 19 points, or 0.09%.
Among major premarket movers, Ulta Beauty (NASDAQ:) advanced 10.1% after the cosmetics retailer raised its annual profit forecast, signaling a revival in demand for perfumes and makeup during the holiday shopping season.
Lululemon Athletica (NASDAQ:) added 8.6% after the sportswear maker increased its full-year forecasts, betting on resilient demand for its athletic wear in the U.S. during the holiday shopping season as well as continued strength in its international business.
