Haim, There was a commentary on the Fed funds futures on CNBC tonight. Since 5/26, the probability of a rate hike this month has gone from 100% on 5/26 to 80% on 5/31 to 40% today. The futures have correctly predicted 31 out of the last 32 actions/nonactions, though this was at the 10 day mark prior to the meeting. It will be interesting to watch that statistic later in the month. Tp
also,
CHICAGO, June 2 (Reuters) - U.S. stock index futures closed
sharply higher Friday on surprisingly soft employment data
indicating that a series of six interest rate hikes by the U.S.
Federal Reserve since June 1999 may finally be cooling the
economy's growth.
Futures contracts rallied sharply in an early-trade buying
spree, adding to overnight gains fueled by optimism about
Friday's data and Thursday's weaker-than-expected Purchasing
Managers Index.
June Standard & Poor's 500 futures closed up 24.50 points
at 1476.00 after jumping 38 points at the open on the
employment data. The contract then pared gains slightly before
retesting its highs in late trade.
Friday's employment report said the U.S. unemployment rate
rose to 4.1 percent in May, up from its 30-year low of 3.9
percent in April. Economists polled by Reuters had expected the
rate to remain unchanged.
The number of Americans on nonfarm U.S. payrolls increased
by only 231,000 in May, far less than April's increase of a
revised 414,000 jobs.
Payroll employment increased solely because of federal
hiring for Census 2000, the once-a-decade U.S. population
tally. Private payrolls actually fell by 116,000.
Economists had predicted payroll employment would grow by
386,000 jobs.
Friday's weak monthly employment data persuaded top Wall
Street firms to reconsider their rate hike forecasts for the
Fed's June 27-28 policymaking meeting.
Only four of 27 primary dealers of U.S. government
securities polled by Reuters Friday expect the Fed to raise the
federal funds rate by 25 basis points. Twenty of 29 primary
dealers in a May 12 Reuters poll predicted at least a 25
basis-point hike.
Most of the dealers polled Friday said the Fed would resume
its inflation-fighting policy in August.
Friday's rally may signal a shift in the stock index
futures market downtrend, said Terence Gabriel, technical
analyst at IDEAglobal.com.
Thursday's S&P contract closed on a trendline drawn between
the highs of March 24, April 10 and May 16, Gabriel said.
"Today, certainly with favorable volume, we blasted above
that trend line," he said.
"We've now made a higher high--really for the first time in
the decline. Usually, that's a signal of a turn in the trend,"
Gabriel said.
Strength in computer-chip and technology stocks boosted the
Nasdaq composite Friday, while tech stocks coupled with sharp
gains in interest-rate sensitive financial and retail stocks
bolstered the Dow Jones Industrial average.
June Dow futures jumped 130 points in early trade, pared
gains, and then rallied slightly in late trade to close up 102
points at 10,772.
Volume was moderate during the first hour and a half of
trading, one S&P trader said. "After that, it began to dry up a
little bit."
Dealer buying was strong until the market topped out around
1485.00 to 1489.00, the trader said.
June S&Ps settled up 24.50 points at 1,476.00, Nasdaq 100s
were up 239.00 at 3751.50, Dow futures up 102 at 10,772,
Russell 2000s up 20.00 at 513.15, Midcap 400s up 11.50 at
503.50 and Nikkeis up 335.0 at 17,225.
408-8750
chicago.derivatives.newsroom@reuters.com))
REUTERS
Rtr 17:19 06-02-00 |
