A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Aug. 23, 2021.
Michael Nagle | Bloomberg | Getty Images
S&P 500 futures were flat on Friday after the August jobs report came in short of expectations, showing the impact of the delta-fueled Covid resurgence.
Stocks held up OK and Nasdaq futures were in the green as investors anticipated the weak data may keep the Federal Reserve from rushing to take away its monetary stimulus.
Nonfarm payrolls increased by 235,000 in August, the Labor Department said Friday. Economists surveyed by Down Jones were expecting 720,000 jobs. The report marks a significant slowdown from July’s revised number of 1.053 million and comes as the delta variant of Covid-19 has led to health restrictions being put back in place in some states and cities.
Forecasts for the report are wide-ranging, from about 300,000 to 1 million. Federal Reserve Chairman Jerome Powell has emphasized the need for more strong jobs data before the central bank would start to unwind its massive bond-buying program, and the disappointing report could change expectations about when the Fed will start its tapering process.
“A surprisingly low jobs number this morning clouds the tapering outlook considerably as only 235k jobs were added in August, likely giving the Fed pause and pushing out their plans to announce their bond taper plans,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said in a note. “Many people believed that the Fed would announce their taper plans at this month’s FOMC meeting and that is no longer likely.”
The central bank will also be looking at how much Covid impacted hiring and activity during August. The virus variant has been a wild card for the economy, and its impact could be a factor that sways the Fed as it considers the first step away from the easing policies. Leisure and hospitality, which is the sector hit hardest by the pandemic in 2020, added zero jobs in August, according to the report.
Jason Furman, who served as the chairman of Council of Economic Advisors under President Barack Obama, said on “Squawk Box” that fears of the delta variant of Covid-19 may have caused a short-term hit to the labor market recovery.
“We’re poised to add a lot of jobs in the coming months as people either get over their fears of delta, the delta virus starts to fall or time starts to fix all of this,” Furman said.
Stocks like Apple, Amazon, Facebook, and Alphabet rose into the green in premarket trading as investors went back into their old Big Tech favorites amid the uncertain outlook for the economy .
On Thursday, the S&P 500 and Nasdaq rose to records on the back of better-than-expected jobless claims data. The initial filings for unemployment insurance fell to their lowest levels since March 2020.
The S&P 500 climbed 0.3%, hitting its 54th record closing high of 2021. The technology-heavy Nasdaq Composite rose 0.14% to close at an all-time high. The Dow Jones Industrial Average popped 131 points or 0.4%.
The S&P 500 and Nasdaq started September on a strong foot. The S&P 500 and the Nasdaq Composite have rise 0.6% and 1.3% so far this week. The Dow is about flat since Monday.
The nonfarm payrolls report came in well below expectations, weighing on stock futures.