Here are five things you must know for Friday, June 3:
1. -- Stock Futures Edge Lower With Jobs Data In Focus
U.S. equity futures edged lower Friday, while the dollar held steady against its global peers, as investors braced for a key reading of the domestic job markets amid increasing concerns over the pace of growth in the world's biggest economy.
With comments from high-level executives such as Jamie Dimon of JPMorgan Chase and Elon Musk of Tesla casting doubt over the near-term strength of the global economy, and payroll processing group ADP indicating a smaller-than-expected level of private job creation last month, today's more comprehensive non-farm payroll report could provide the market a firm direction for the coming weeks.
Underlying inflation pressures, as well, continue to trouble investors following a record-high reading in Europe this week as well as a chorus of Federal Reserve governors -- including vice chair Lael Brainard -- who feel the central bank needs to hold firm on its path of near-term rate hikes in order to bring down the fastest inflation rates in more than forty years.
The expectation of rate hikes, which has given rise to Treasury bond yields, has also boosted the U.S. dollar to its highest levels in two decades, adding a further headwind to earnings generation for some of world's biggest companies, including Microsoft (MSFT), which cautioned yesterday that its current-quarter profits would fall short of forecasts thanks in part to the surging greenback.
The dollar was modestly softer this morning, falling 0.1% against a basket of its global peers to 101.784, with benchmark 10-year Treasury note yields holding at 2.917%.
In overseas markets, European stocks added to yesterday's gain by rising 0.21% in early Frankfurt trading while the region-wide MSCI ex-Japan index gained 0.38% in a follow-on rally from last night's close on Wall Street.
On Wall Street, futures tied to the Dow Jones Industrial Average indicating a modest 75 point opening bell decline while those linked the S&P 500 were priced for a 15 point move to the downside. Futures linked to the tech-focused Nasdaq are priced for an 80 point opening bell pullback.
2. -- Hiring to Slow, But Unemployment Likely to Dip In Complicated Job Market
U.S. employers likely added around 325,000 new jobs to the economy last month, according to forecasts for Friday's May employment report, as hiring slows amid growing uncertainty over the impact of surging inflation. on corporate growth.
ADP's national employment report, a smaller sample that focuses on private-sector payrolls, delivered a much weaker-than-expected tally of 128,000 yesterday, while the employment component of the May ISM manufacturing survey dipped below the 50 point mark that separates growth from contraction.
All this, however, is set against a near-record level of job quits in the month of April -- 4.4 million -- as well as more than 11.4 million unfilled positions.
The surge in energy prices and the drop in stock prices can’t be helping here, and it likely will trigger a further slowing in business formations over the next few months," said Ian Shepherdson of Pantheon Macroeconomics. "But an outright decline in payrolls—a key characteristic of recessions—seems very unlikely to us."
Economists are looking for a headline gain of 325,000 new jobs, with average hourly earnings rising 5.2% from last year. The headline unemployment rate is set to dip to 3.5% when the data is released at 8:30 am Eastern time.
3. -- Tesla Shares Slide on Musk's 'Super Bad' Feeling
Tesla (TSLA) shares moved lower in pre-market trading following a report that suggested CEO Elon Musk is looking to pare around 10% of the carmaker's global workforce.
Musk, who just days ago excoriated executives who wished to work from home, told employees he has a "super bad feeling" about the economy and wishes to "pause all hiring" for the clean-energy carmaker and trim around 10% of its 100,000 headcount.
The warning, which came in the form of a company-wide email, comes amid what is likely to be a grim quarter for Tesla, which has seen its Shanghai factory close for 22 days, with slowing output on its re-opening, thanks to the city's strict Covid lockdown. Deliveries are likely to be impacted, and the group will also need to take a notable write-down on its bitcoin holdings, which are down 33% since the end of March.
Tesla shares were marked 3.35% lower in premarket trading to indicate an opening bell price of $749.00 each, a move that would extend the stock's year-to-date gain to around 29.2%.
4. -- Lululemon Shares Higher After Q1 Earning Beat, Forecast Boost
Lululemon Athletica (LULU) shares moved higher in pre-market trading at the high-end leisure apparel group posted stronger-than-expected first quarter earnings and boosted its full-year profit forecast.
Lululemon said it sees fiscal 2023 earnings in the region of $9.42 and $9.57 per share, a 25 cents per share improvement from its prior forecast, on revenues of between $7.61 billion and $7.71 billion. The group earned an adjusted $1.48 per share on sales of $1.6 billion for the three months ending in April, as it imposed "select price increases" to offset higher input costs and air freight charges.
"However, unlike many in the industry, we do not use promotional pricing as a lever to drive top line sales," CEO Calvin McDonald told investors on a conference call late Thursday. "Therefore, we are very intentional with our pricing strategies, and we monitor guest response accordingly."
"That said, I remain cautious around increasing prices in this period of uncertainty, and we will continue to monitor and maintain a measured approach toward this strategy," he added.
Lululemon shares were marked 1.3% higher in premarket trading to indicate an opening bell price of $306.58 each, a move that would leave the stock with a year-to-date decline of around 21.8%.
5. -- Texas Eighth Grader Harini Logan Wins National Spelling Bee
A palm-moistening spell-off between the final two contestants in the 2022 Scripps National Spelling Bee ended with the winner, fourteen year-old Harini Logan from San Antonio, rattling off the word 'moorhen' for the coveted Scripps Cup trophy.
Logan, who attends the Montessori School of San Antonio, defeated twelve year-old Vikram Raju of Denver in a head-to-head 'spell off' created for this year's competition, correctly spelling 22 words to Raju's 15 to take home both the trophy and the $50,000 cash prize.
”At first I was a little uneasy and just decided to take it in stride," Logan said when asked if she was nervous about the spell-off. "We knew it was going to be a part of the competition, if it came down to it."
Moorhen, for those interested, also known as a 'marsh hen', is a "a medium-sized member of the rail family found in aquatic environments".
