Stock futures point to further gains after 'Goldilocks' jobs report – MarketWatch

U.S. stock-index futures pointed to a higher open on Monday, with the Nasdaq set to mark a return to record territory as investors continued to view last week’s jobs report as suggesting an ideal environment for investing in stocks.

Friday’s labor data for February, which revealed solid jobs growth, but a smaller increase in wages. That helped to assuage some worries about the pace and intensity of Federal Reserve interest-rate hikes this year.

What are the main benchmarks doing?

Dow Jones Industrial Average futures YMM8, +0.47% rose 58 points, or 0.2%, to 25,419, while S&P 500 futures ESM8, +0.47%  rose 6.5 points, or 0.3%, to 2,795.20. Nasdaq-100 futures NQM8, +0.61%  climbed 30 points, or 0.4%, to 7,155.25.

On Friday, the Dow DJIA, +0.31% surged 440.53 points, or 1.8%, to end at 25,335.74, marking the first time the blue-chip index has finished above 25,000 since Feb. 28. The index gained 3.3% for the week. The S&P 500 index SPX, +0.25% rose 1.7% on Friday, climbing 3.5% for the week.

The Nasdaq Composite Index COMP, +0.38% saw a record close, climbing 1.8% to 7,560.81, and surging 4.2% for the week.

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What could drive the markets?

With nothing major on the economic data calendar, the market’s focus will likely remain on last week’s so-called Goldilocks jobs numbers. The nonfarm-payrolls report Friday showed 313,000 jobs were created in February, better than expected—but wage growth came in below expectations.

Investors have feared that a tighter labor market could lead to higher inflation on the side of wages, and more pressure from the Fed to pick up the pace of its interest-rate hikes. More interest-rate hikes than the market expects could damp enthusiasm for stocks.

Friday’s data and reaction was a marked difference from January jobs data released early last month, when a jump in hourly earnings growth sparked a selloff for stocks that morphed into the first correction in roughly two years. A correction is defined as a drop of 10% or more for stocks.

Investors will get a second indication of inflation this week, with an update on consumer prices due Tuesday. As well, retail sales are scheduled for release on Wednesday.

On Monday, just the Federal budget for February is due at 2 p.m. Eastern.

Read: The stock market will remain glued to the inflation story

Plus: Worry about rising inflation? Sure, but there’s no reason to be scared

What are strategists saying?

“Despite the stock market’s rally, there are concerns that market participants are reading too much into this one report. Whilst labor demands are currently being met with labor supply, the labor market keeps on tightening, which should eventually feed through into higher inflation expectations,” said Jasper Lawler, head of research at London Capital Group, in a note to clients.

As well, said Lawler, the jobs report is still strong enough to keep the Fed’s plans to hike in March intact. “February’s inflation and consumer spending figures will be in focus this week; however as with the NFP it would take to serious miss in both readings to throw the Fed off course,” he added.

Which stocks are in focus?

Shares of Oclaro Inc. OCLR, +24.52%  jumped 26% in premarket, after Lumentum Holdings Inc. LITE, +2.50%  said it would acquire the optical components company in a deal valued at $1.8 billion.

Dow Chemicals leader Andrew Liveris plans to step down at the end of the month. Co-lead director Jeff Fettig will assume that role at the company, now known as DowDuPont Inc. DWDP, +0.65% and soon to be broken apart. Shares of the DowDuPont were up 0.5% in premarket trade.

Biogen Inc. BIIB, -1.26%  said Monday it reached a deal to buy a phase-2b-trial-ready schizophrenia treatment from Pfizer Inc. PFE, +0.20%  for up to $590 million. Shares of Biogen were down 0.9% before the opening bell, while those for Pfizer were up slight 0.2% in premarket action.

Sempra Energy SRE, -0.06% said Monday Chief Executive Debra Reed will step down as CEO on May 1, but will remain as executive chairman until she retires on Dec. 1, 2018 after over 40 years with the company. Shares of the company weren’t showing significant activity premarket.

Shares of Broadcom Ltd. AVGO, +3.11% rose 2.4% in premarket trade Monday, after the Singapore-based semiconductor company said it expects to complete the redomicilation to the U.S. by April 3, 2018.

What are other assets doing?

Keying off Wall Street’s gains last week, European stocks SXXP, +0.35% opened higher, while Asian markets got off to a strong start.

Across other assets, ICE U.S. Dollar Index DXY, -0.05% was pulling back some, specifically against the Japanese yen USDJPY, -0.27% Gold prices GCJ8, -0.40% were modestly lower. Oil prices CLJ8, -0.64%  were also drifting lower.

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The yield on the 10-year U.S. Treasury TMUBMUSD10Y, -0.22%  was up less than a full basis point at 2.901%