Morning MoneyBeat is the Journal’s pre-market primer. To receive this morning newsletter via email, click here: http://on.wsj.com/MoneyBeatUSSignup

OVERNIGHT DEVELOPMENTS

Global stocks were mostly steady Friday as investors awaited a key reading on the U.S. labor market. The Stoxx Europe 600 was flat midday, while shares in Asia edged lower in thin trade.

BREAKFAST BRIEFING

Most expect Friday’s jobs number to fall well below the recent trend. And in the short term that could provide support for the markets.

January’s nonfarm payrolls report is set to hit the tape at 8:30 a.m. Economists surveyed by Dow Jones expect the U.S. economy to have added 185,000 jobs last month. That’s well below the 221,000 jobs that were added per month in 2015.

The market is unlikely to perceive a number that comes in at consensus or a bit softer as providing the Fed with enough confidence to push short-term interest rates up further, especially if the jobless rate and average hourly earnings of workers don’t improve.

When the Fed increased rates in December for the first time in nearly a decade, it indicated that it expected rates to rise by a full percentage point this year, with market participants interpreting that to mean four hikes of a quarter of a percentage point each time. Late last year, traders and investors placing bets on the direction of rates in the futures market thought the chances were better than half that the central bank would up rates again in March.

A rash of disappointing economic data has increasingly convinced investors that the Fed is unlikely to raise rates in March and possibly not even this year though. That belief drove stocks and treasuries higher Wednesday and Thursday, while the U.S. dollar weakened.

A jobs number in line with or below expectations is likely to support that belief.

But there is evidence that January’s employment report could come in weaker than forecast. Recent labor market indicators from the ISM manufacturing and non-manufacturing surveys to jobless claims were weaker last month.

And that’s where it gets tricky for investors. If the jobs number comes in too far below expectations, it could spook investors. Recession fears have had the market on edge since the start of the year. Amid all the downbeat economic data, the jobs market has remained a bright spot. If the labor market falters too badly, it will only increase the recession whispers. And then investors may well decide to sell regardless of what it means to Fed policies.

DAILY FACTOID

This day in 1994, white supremacist Byron De La Beckwith was convicted in the murder of African-American civil rights leader Medgar Evers, more than three decades after the crime occurred.

KEY EVENTS

8:30 a.m.: Dec. International Trade [Prior: -$42.37 billion, Consensus: -$43.5 billion]

Exports dropped by 4.6% in the first 11 months of 2015, helping widen the U.S. trade deficit by 5.5% from the previous November. The Commerce Department releases December figures, offering a snapshot of how the strong dollar and cheap oil prices have affected imports and exports.

8:30 a.m.: Jan. Employment Report [Nonfarm Payrolls Prior: 292,000, Consensus: 185,000; Unemployment Rate Prior: 5%, Consensus: 5%; Average Hourly Earnings Prior: -0.04%, Consensus: 0.3%]

After December’s better-than-expected figures, January’s jobs report will show whether last month’s 292,000 hires represented a clear signal or seasonal noise about the state of the job market.

3 p.m. Dec. Consumer Credit [Prior: $13.95 billion, Consensus: $14.5 billion]

This report will offer a snapshot of how the elevated U.S. dollar and cheap oil prices have affected exports and imports. Exports declined by 4.6% in the first 11 months of 2015, helping widen the U.S. trade deficit by 5.5% from the previous November.

STOCKS TO WATCH

Shares of LinkedIn Corp. fell 30% after the professional online network posted a fourth-quarter loss and forecast a much weaker-than-expected 2016 as it shifts gears on its advertising strategy.

Shares of Symantec jumped 8.6% in after-hours trading following the announcement that Silver Lake is making a $500 million investment. The company plans to return $5.5 billion in capital to shareholders through the next year.

MUST READS

Rate Expectations — Not So Fast, Fed: Wall Street is increasingly skeptical about the pace of Federal Reserve interest-rate increases this year.

January Jobs Report Closely Watched for Momentum, Wages: The U.S. job market strengthened in 2015, posting its second-best year of job gains since 1999. Friday’s jobs report will reveal whether that momentum carried into 2016.

Why the Fed Can’t Save Markets Right Now: The Federal Reserve could clear the air by taking a March rate increase completely off the table. But that is easier said than done.

Jobs Report — The Big Problem It Faces: Weak manufacturing activity casts a cloud over Friday’s jobs report.

What’s Next for Sweden a Year After Adopting Negative Rates? A year after cutting its main interest rate below zero percent for the first time ever, the board of Sweden’s central bank is considering further bold moves to keep a buoyant national currency in check and jolt desperately moribund inflation.

As Stocks Slump, Investors Look for Lift From Buybacks: U.S. companies are able to buy back their shares again after mostly sitting out earnings season, and investors are hoping for a raft of purchases that will help lift the broader market.

The Hottest Idea in Finance: Capital Controls Are Good: Long shunned by economists, capital controls are gaining advocates as a tactic to cope with destabilizing global investment flows.

Viacom and CBS: What Really Changes? The divergent performance of Viacom and CBS mean the former’s new chairman has more to prove.

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Please complete the equation below: *

This site uses Akismet to reduce spam. Learn how your comment data is processed.