Here are five things you must know for Friday, July 8:
1. -- Stock Futures Edge Lower With Jobs Data In Focus
U.S. equity futures edged lower Friday, while the dollar test fresh new highs against its global peers and Treasury bond yields continued to flash recession warnings, as investors pulled back from a four-day rally on Wall Street ahead of key jobs data later in the session.
Stocks have been rising for much of the week amid bets that the coming earnings season, set to kick-off next week, may prove to be more resilient than analysts' expect and that Federal Reserve officials will be able to thread the needle between taming inflation with rate hikes while keeping the economy from tipping into recession.
St. Louis Fed President James Bullard said yesterday that labor market data suggests the economy is still growing, while Fed Governor Christopher Waller told the National Association for Business Economics that while he favored rate hikes in July and again in September, we suggested their pace and size could slow over the final months of the year.
Much will depend, of course, on the pace of jobs growth and the ability of companies to navigate their myriad inflation challenges while passing on cost increases to customers in order to maintain profit margins.
Collective S&P 500 earnings are forecast to rise by 5.6% from last year over the second quarter, to a share-weighted $440.2 billion, with energy and industrials pacing the anticipated gains.
Prior to that, markets will pick through Friday's June employment report, which is expected to show 268,000 new jobs were added to the economy last month, keeping the headline unemployment rate at 3.6%.
Ahead of the payroll data, Europe's Stoxx 600 was marked 0.29% lower in early Frankfurt trading, following on from a 0.42% gain for the Asia-region MSCI ex-Japan index and a 0.1% bump for the Nikkei 225 in Tokyo, which was muted by news of the assassination of former Prime Minister Shinzo Abe during a campaign event.
In the U.S., bond markets continue to flash recession warnings, with 2-year Treasury note yields trading at 3.01% and 10-years notes trading at 2.98%. The dollar index, which tracks the greenback against a basket of its global peers, was marked 0.38% higher at a fresh twenty-year high of 107.524.
On Wall Street, futures tied to the S&P 500 are indicating a 11 point opening bell pullback while those liked to the Dow Jones Industrial Average are priced for a 44 point slide. Futures linked to the tech-focused Nasdaq are indicating a 52 point decline.
2. -- Wage Growth Key As Hiring Slows Amid Recession Fears
Jobs growth remains a key focus for the Federal Reserve's assessment of the heath of the broader economy, which only elevates the importance of Commerce Department date on the labor market as investors debate the prospect of faster central bank rate hikes.
Employers likely added 268,000 new jobs last month, a figure that suggests a slower pace of hiring from the early part of this year but still solid enough to keep the economy ticking over. Jolts data earlier this week showed that around 11 million position remain unfilled, suggesting hiring will need to accelerate in order to reach full employment, but that will largely depend on the rate of broader economic expansion over the coming months.
"Whatever the initial June estimate, the underlying story here seems straightforward; net hiring could not possibly remain at last fall’s pace as the level of payrolls began to approach the pre-Covid peak," said Ian Shepherdson of Pantheon Macroeconomics. "We appreciate that payrolls remain several million below the level which would have prevailed if the pandemic hadn’t happened, but that’s not relevant at this point; the economy is smaller than we would have expected ex-Covid too."
Wage growth will also be a focus of today's numbers, given the slower pace of gains recorded in the spring, as both an indicator of consumers' ability to absorb price increases and employers' baseline labor costs.
Economists expect average hourly earnings are up 5% from last year, down from the 5.2% pace recorded in May, with hours worked holding at 34.6.
3. -- Twitter Tumbles On Report That Musk Takeover In 'Serious Jeopardy'
Twitter (TWTR) shares slumped lower in pre-market trading following a report from the Washington Post that suggested Elon Musk's $44 billion takeover bid for the group is in "serious jeopardy".
The report, which appears to reply heavily on sources inside the Tesla CEO's camp, says Musk remains convinced that Twitter is not being forthright with respect to its calculations of spam or fake accounts on the micro-blogging website.
Musk, who waived his right to due diligence on the deal when it was unveiled earlier this spring, has consistently said that Twitter is refusing to co-operate by not sharing its calculations of fake accounts, while Twitter said it stood by its earlier filings with the Securities and Exchange Commission, which suggest less than 5% of total accounts are spam or fake.
The Post said Musk could take "drastic action" with respect to the deal soon, but noted that the legal entanglements, as well as the $1 billion break-up fee tied with the proposed takeover, add another layer of complexity to the Tesla CEO's challenge.
Twitter shares were marked 4.23% lower in pre-market trading to indicate an opening bell price of $37.15 each, a level that is 31.5% south of Musk's "best and final" offer of $54.20 per share for the group.
4. -- GameStop Slumps After Retailer Fires CEO, Reportedly Plans More Job Cuts
GameStop (GME) shares traded firmly lower in pre-market trading after the video game retailer fired its CFO, Michael Recupero, amid reports of wider staffing cuts less than twenty-four hours after it unveiled a four-for-one stock split.
GameStop's chief accounting officer, Diana Saadeh-Jajeh, will replace Recupero, the company said in a Securities & Exchange Commission filing, while Axios reported that the group is also set to lay off a large but undetermined number of staff.
GameStop, which is hoping to transition from a reliance on brick-and-mortar sales to a larger and more dynamic presence online, said revenues for the three months ending in April rose 8.1% from last year to $1.38 billion, with around half of that total coming from its digital channels.
The group still posted a loss of $2.08 per share, however, and decline to take questions from analysts -- as has been the case for several quarters -- on its regular post-earnings conference call.
It also plans a four-for-one stock split, set to take effect on July 22, that will see shareholders will receive a three-stock dividend for each share they own after the close of trading on July 21
GameStop shares were marked 7.4% lower in pre-market trading to indicate an opening bell price of $125.11 each.
5. -- Former Japan Prime Minister Shinzo Abe Dies After Being Shot During a Campaign Speech
Former Japan Prime Minister Shinzo Abe was shot and killed during a campaign event in the western city of Nara Friday, sending shockwaves through a nation and a region unaccustomed to gun violence or political assassinations.
Abe, 67, was delivering a speech in Nara ahead of Parliamentary elections slated for this Sunday that were expected to consolidate the power of ruling Prime Minister Fumio Kishida, when he was shot twice by a 41-year-old suspect who was quickly detained by police, Japanese media reported.
The former two-term Prime Minister was rushed to a local hospital, but died during emergency surgery around five hours later, officials confirmed, marking only the second assassination of a sitting or former leader in nearly 100 years.
"This attack is an act of brutality that happened during the elections - the very foundation of our democracy - and is absolutely unforgivable," Prime Minister Kishida said.
