Wall St set for higher open after payrolls data; Middle East tensions in focus
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US job growth surges in Sept; unemployment rate falls to 4.1%
Spirit Airlines tanks after report of bankruptcy filing
Futures up: Dow 0.48%, S&P 500 0.70%, Nasdaq 0.99%
Updated at 08:44 a.m. ET/1244 GMT
By Johann M Cherian and Purvi Agarwal
Oct 4 (Reuters) - Wall Street's main indexes were set for a higher open on Friday after a crucial labor report eased concerns about a rapid cooldown in the jobs market, while investors remained vigilant for potential escalations in the Middle East conflict.
A Labor Department report showed nonfarm payrolls rose 254,000 in September, more than the estimate of 140,000, according to economists Reuters polled. The unemployment rate dipped to 4.1% for the previous month, versus an estimate of 4.2%.
Odds of a 25-basis-point reduction at the U.S. Federal Reserve's November meeting rose to 85.5%, up from more than 71% before the data, according to the CME Group's FedWatch Tool.
"For the economy, it means that a soft landing is happening. We continue to add jobs at a rapid clip and the unemployment rate continues to tick down," said Ross Mayfield, investment strategist at Baird.
"It means the Fed is unlikely to cut (by) 50 basis points in November or December, certainly, and maybe even take a pause in November."
Dow E-minis 1YMcv1 were up 204 points, or 0.48%, S&P 500 E-minis EScv1 were up 40.25 points, or 0.70% and Nasdaq 100 E-minis NQcv1 were up 197.75 points, or 0.99%.
Futures tracking the small-cap Russell 2000 index RTYc1 rose more than 1%.
Yield on two-year Treasury notes US2YT=RR rose to 3.87% after the data was released as investors priced out a larger reduction by the Fed in November. US/
Rate-sensitive growth stocks such as Tesla TSLA.O added 2.2%, Amazon.com AMZN.O climbed 1.9%, while chip giant Nvidia NVDA.O rose 1.3% in premarket trading.
The labor market has been under greaterscrutiny after the U.S. central bank slashedinterest rates in September by a rare 50 basis points to stave off further weakening in employment.
Traders expect borrowing costs to fall by an additional 56bps before the year ends, down from an estimate of nearly79 bps a week ago, according to data compiled by LSEG, as recent reports pointed to strong service sector activity in September.
Wall Street's main indexes closed lower on Thursdayand were set to finish the first week of October on a weakerfooting as investors were nervous aboutescalating tensions in the Middle East and the workers' strike earlier this week.
Analysts said the events could impact the inflation and labor figures for October.
Energy stocks such as Occidental Petroleum OXY.N edged higher 0.71% while ExxonMobil XOM.N and Chevron CVX.N crept up 0.60% each as crude prices surged on worries ofsupply disruptions in the Middle East due to the widening regional conflict.
The S&P 500 Energy sector .SPNY is on track to log its biggest weekly jump since March 2023.
Meanwhile, ports on the East and Gulf Coasts began reopening late on Thursday after workers reached a wage deal, but clearing the cargo backlog will likely take time. U.S. shares of Zim Integrated Shipping Services ZIM.N were down 11%.
Among others, Spirit Airlines SAVE.N nosedived 33% after a report showed the carrier was in talks with bondholders about the terms of a potential bankruptcy filing after its failed merger with JetBlue Airways JBLU.O.
Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Pooja Desai
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