Here are five things you must know for Friday, May 6:
1. -- Stock Futures Edge Lower, With Volatility Surging, Ahead of Jobs Report
U.S. equity futures edged lower in early Friday trading, although investors are braced for another whipsaw session on Wall Street as volatility gauges leap, the dollar soars and and Treasury yields climb ahead of a key reading of the domestic jobs market prior to the start of trading.
The past two sessions on Wall Street, in fact, have seen the biggest swings for U.S. stocks in more than two years, with the S&P 500 rising the most since April 2020 and Wednesday following a dovish take on the Federal Reserve's 50 basis point rate hike, and the Dow plunging more than 1,000 points for its biggest single-day decline since October of 2020 on Thursday.
More of the same is possible on Friday, as well, with the CBOE's benchmark volatility index, the VIX, trading 27% higher at 32.5 points, the highest since early March.
Investors are also proving to have serious concerns for the credibility of Fed Chairman Jerome Powell, who triggered Wednesday's rally in part by stressing that the central bank is not "actively considering" a 75 basis point rate hike in June. The CME Group's FedWatch tool, however, suggests rate traders are placing a 91.5% probability on just such a move in six weeks' time.
That's pushed the U.S. dollar index, which tracks the greenback against a basket of six global currencies, to a fresh 20-year high of 100.04 in overnight trading, while benchmark 10-year Treasury note yields are hovering at the highest levels in three-and-a-half years and were last seen trading at 3.083%
Oil was also back on the march after hitting a five-week high yesterday following OPEC's decision to maintain its path for only modest output increases over the coming months as cartel members fret over slumping demand in China linked to its ongoing Covid crisis.
WTI futures for June delivery were marked $1.77 higher at $110.03 pe barrel while Brent contracts for July added $1.79 to trade at $112.70 per barrel.
Last night's sell-off on Wall Street, which extended the S&P 500's year-to-date decline to around 13%, bled quickly into the Asia session, with the region-wide MSCI ex-Japan index falling 2.77%. European stocks fared only marginally better, with the Stoxx 600 slumping 1.14% in early Frankfurt trading and Britain's FTSE 100 down 0.76% in London.
Back on Wall Street, futures contacts tied to the Dow Jones Industrial Average indicating a 40 point opening bell decline ahead of the April jobs report at 8:30 am Eastern time while those linked the S&P 500 priced for a 10 point retreat. Futures linked to the tech-focused Nasdaq are looking at a 40 point opening bell dip.
2. -- Jobs Friday: Wages In Focus As Fed Cautions On Tight Labor Market
U.S. employers likely added nearly 400,000 new jobs into the economy last month according to analysts' forecasts for Friday's April employment report, pulling the headline employment rate to a multi-decade low of 3.5%.
The figures, however, belie one of the most complicated labor markets in U.S. history, marked by a record rate of jobs quits over the month of March, and data showing some 11.55 million positions remain unfilled in the world's biggest economy.
Those numbers seem difficult to square with the fact that around 93% of the jobs lost during Covid have been recovered, suggesting a near-term slowdown in hiring later this year. Or, as has been evidenced by companies such as Amazon (AMZN), Target (TGT) and Starbucks (SBUX), significant wage increases will be needed to temp recalcitrant workers back into the labor force, adding so-called 'second round' inflation effects to go along with surging food and energy prices.
"The latest data tell us there are twice as many job openings as unemployed which illustrate the tightness of the labor market as highlighted at the recent Fed press conference," said Jeffrey Roach, Chief Economist for LPL Financial. While the latest ISM surveys point to a slowdown in job creation and April may be the first month of that slowdown."
3. -- Boeing Shares Edge Higher As Planemaker Unveils Move to Washington D.C.
Boeing (BA) shares edged higher in pre-market trading after the world's biggest planemaker said it will relocate its corporate headquarters to the suburbs of Washington, D.C.
In a move widely seen as an effort to improve its relationship with regulators following a very public scolding by the Federal Aviation Administration, as well as big-name lawmakers on Capitol Hill, Boeing will leave its Chicago hub, its base for the past 20 years, for a new corporate headquarters in Arlington, Virginia, just a few miles away from the Pentagon.
"We are excited to build on our foundation here in Northern Virginia. The region makes strategic sense for our global headquarters given its proximity to our customers and stakeholders, and its access to world-class engineering and technical talent," said CEO Dave Calhoun. "We greatly appreciate our continuing relationships in Chicago and throughout Illinois. We look forward to maintaining a strong presence in the city and the state."
Boeing's reliance on a good relationship with the FAA, which was critical of its safety and reporting procedures following fatal crashes of the 737 Max in 2018 and 2018 that ultimately lead to the firing of former CEO Dennis Muilenburg, was evident in the group's most-recent earnings report.
The planemaker said it submitted a certification plan to the FAA that it hopes could see it resume 787 Dreamliner deliveries later this year, a move that mitigated the surprisingly wide first quarter loss of around $1.5 billion.
Boeing shares were marked 0.15% higher in pre-market trading to indicate an opening bell price of $150.70 each.
4. -- DoorDash Shares Surge As Delivery Group Sees Robust Near-Term Demand
DoorDash (DASH) shares leaped higher in pre-market trading after the food delivery specialists posted stronger-than-expected first quarter sales and issued a robust near-term outlook for customer orders and overall activity.
DoorDash said gross order value, its metric for both subscription fees and customer orders, would likely hit the $50 billion mark this year, a modest increase from its prior forecast but solid enough in the face of changing consumer habits in a post-pandemic economy.
The boost followed a wider-than-expected first quarter loss of 48 cents per share for the three months ending in March, with revenues rising 35% from last year to a Street-beating $1.5 billion.
"Just as consumers are exhibiting the behavior where they're going back inside restaurants and seeing friends again and families again and eating together, and they're also ordering delivery at the same time," CEO Tony Xu told investors on a conference call late Thursday. "Restaurants are noticing that, too."
DoorDash shares were marked 6.4% higher in pre-market trading to indicate an opening bell price of $77.80 each.
5. -- Zillow Shares Slump On Soft Outlook As Mortgage Rates Surge
Zillow (ZG) shares slumped lower in pre-market trading after the online real estate platform forecast softer-than-expected near-term revenues amid a surge in residential mortgage rates that could trigger a broader slowdown in the housing market.
Zillow said revenues for the three months ending in June would likely come in at around $1 billion, why shy of the $1.8 billion Wall Street consensus and down from the $4.26 billion recorded over the first quarter.
U.S. 30-year fixed mortgage rates hit a 13 year high of 5.27% last week, according to data from Freddie Mac, a move that compares to a rate of just 2.96% over the same period last year. New and existing home sales are also slowing and the Fed's rate hike path suggests borrowing costs will continue to rise until at least the end of the year.
"With forecasts varying widely, one thing that is clear about the 2022 housing market is that the path ahead is uncertain." Zillow said in a letter to shareholders. "While it's clear people still have a strong interest in moving, total consumer transaction value growth trends are softening."
Zillow shares were marked 10% lower in pre-market trading to indicate an opening bell price of $35.15 each.
