BLBG: U.S. Stock Futures Maintain Losses as Investors Weigh Jobs Data
U.S. equity futures maintained losses as investors weighed data showing employers added 173,000 workers in August and the jobless rate dropped to 5.1 percent.
Contracts on the Standard & Poor’s 500 Index expiring in September lost 1 percent to 1,927.25.
The gain in payrolls, while less than forecast, followed advances in July and June that were stronger than previously reported, the Labor Department said Friday. The unemployment rate is the lowest since April 2008. Average hourly earnings climbed more than forecast and workers put in a longer workweek, the report also showed.
The jobs report is the last major data point before the Fed meets later this month on Sept. 16-17 to discuss the timing of its first increase in interest rates in nearly a decade. Traders are now pricing in a 26 percent chance that the central bank will act this month, down from 38 percent last week.
August tends to be a pocket of “payroll weakness” even in strong years for hiring, Deutsche Bank economists wrote in a note yesterday. And history shows economists don’t have a very good handle on August -- they have overestimated the August payroll prints over the past four years by an average of about 50,000.
Fed Bank of Richmond President Jeffrey Lacker said it’s time for the central bank to end the era of record-low interest rates, now that the impacts from winter weather and energy prices have passed.
The Richmond Fed president, who’s historically been more inclined toward tighter policy than most of his colleagues, said Friday that labor-market slack has been reduced to pre-recession levels, and shorter-term inflation measures are tracking the U.S. central bank’s 2 percent target.
“I am not arguing that the economy is perfect, but nor is it on the ropes, requiring zero interest rates to get it back into the ring,” Lacker said in the text of a speech in Richmond. “It’s time to align our monetary policy with the significant progress we have made.”
U.S. stocks closed little changed yesterday, erasing a rally of nearly 200 points for the Dow as optimism over the European Central Bank’s revamp of quantitative easing faded. September is historically the worst month of the year for the S&P 500, with the equity gauge falling 1.1 percent on average based on data going back to 1927, according to data compiled by Bloomberg.
