By Investing.com — Wall Street is seen treading water Friday ahead of the release of the widely-watched monthly US jobs report for clues of future Federal Reserve policy. Bitcoin slips back below $100,000, and its dominance could be threatened, while investors turn towards cash.
1. Payrolls loom large
All eyes Friday will be on the US payrolls data release, due later in the session, for fresh insights into how the economy is faring ahead of the Federal Reserve’s December meeting.
Economists are expecting the economy to have added 202,000 jobs in November, a sharp rebound from the meager 12,000 jobs added in October after disruptions from strikes and hurricanes resulted in jobs growth being severely constrained.
That was the smallest gain since December 2020.
Such a rebound is unlikely to alter market expectations that the Federal Reserve will cut interest rates again later this month, especially as US private payrolls growth slowed in November and the number of Americans filing new applications for unemployment benefits rose slightly last week.
But a repeat of September’s blowout jobs report could disrupt expectations for future Fed rate cuts.
Financial markets currently see a roughly 70% chance of a 25 basis points rate cut at the US central bank’s Dec. 17-18 policy meeting, CME’s FedWatch tool showed.
2. Futures steady ahead of nonfarm payrolls
US stock futures were little changed Friday, with investors wary of committing ahead of the release of the widely-watched monthly official jobs report.
By 03:50 ET (07:50 GMT), the Dow futures contract was up 20 points, or 0.1%, S&P 500 futures climbed 3 points, or 0.1%, and Nasdaq 100 futures rose by 23 points, or 0.1%.
The main benchmarks retreated from the previous session’s record levels Thursday, with the Dow Jones Industrial Average leading the way, falling almost 250 points, or 0.6%.
Week to date, the broad-based S&P 500 is up 0.7%, the tech-heavy Nasdaq Composite has gained 2.5%, while the DJIA is down marginally.
The day’s key focus will be on the nonfarm payrolls release, with investors looking for clues to the health of the US labor market after Fed Chair Jerome Powell stated earlier in the week that the largest economy in the world was strong enough for the central bank to move carefully on rate cuts.
On the corporate side, the likes of Ulta Beauty (NASDAQ:ULTA), Gitlab (NASDAQ:GTLB) and DocuSign (NASDAQ:DOCU) will be in the spotlight after the companies all released well received results after the close on Thursday.
3. Bitcoin dominance to fade?
Bitcoin slipped lower Friday, retreating after the breach of the $100,000 mark earlier in the week, and the world’s most popular cryptocurrency dominance could fade.
At 03:50 ET, Bitcoin traded 4.3% lower to $98,550.0, still over 1% higher this week.
The digital currency surged to record highs this week on optimism over friendlier regulations under Donald Trump, with the most recent The latest point of support coming from Trump nominating pro-crypto lawyer Paul Atkins as the next Chairman of the Securities and Exchange Commission.
Market capitalization of the whole crypto sector hit a record high of $3.7 trillion on Thursday, but interestingly Bitcoin’s relative share of market capitalization fell to 53.9% by Friday, data from Coinmarketcap showed, after hitting a three-year high, at around 59%, in late November.
Analysts at Citi warned that regulatory clarity may erode the coin’s dominance in crypto markets, as it could broaden the asset class’s appeal, fostering strength in coins and tokens beyond Bitcoin.
“Over the long-term, we think a network’s utility or value will be related to usage, as well as macro correlations and production costs. A new regulatory regime may unlock further or broader use cases for blockchain assets,” Citi analysts wrote, in a note.
4. Investors turn to cash
Uncertainty over whether the recent gains on Wall Street, that have resulted in record closing levels, can continue has seen investors turn to cash this week.
A report from Bank of America, published earlier Friday, indicated that investors ploughed $136.4 billion into cash in the week to Wednesday, the biggest weekly inflow since March 2023, when markets were rattled by a regional banking crisis.
Buying of U.S. equities continued for the ninth consecutive week, although at a reduced level with inflows of just $8.2 billion of stocks, while investors also bought $4.9 billion of bonds.
Crypto got a $3 billion injection, and clocked its largest four-week inflow ever, at $11 billion.
5. Brent on course for weekly loss
Oil prices slipped lower Friday, with the global benchmark Brent on course for substantial weekly losses on concerns of slowing demand after OPEC+ extended its current run of supply cuts until well into 2025.
By 03:50 ET, the US crude futures (WTI) dropped 0.4% to $68.02 a barrel, while the Brent contract fell 0.4% to $71.77 a barrel.
For the week, Brent was on track to drop around 1.5%, while WTI hung on to marginal gains.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, delayed the start of its oil output increases by three months until April and extended the full unwinding of cuts by a year until the end of 2026.
The group of top producers originally planned to start unwinding cuts from October, but a slowdown in global demand – especially in China – has forced it to postpone the plan several times.
The cartel has also repeatedly cut its demand growth forecasts for 2024 and 2025.
