US pre-open: Stocks to make more gains as investors eye payrolls

US stocks looked set to build on the gains they made in the previous session on Friday amid growing expectations that the latest non-farm payrolls report will cement the case for a Fed rate hike.

At 1140 BST, Dow Jones Industrial Average and Nasdaq futures were up 0.3%, while S&P 500 futures were 0.2% firmer. On Thursday, all three indices hit records after the ADP employment report came in much better than expected. The report showed the US private sector added 253,000 jobs in May, comfortably surpassing expectations for a 185,000 gain.

Spreadex analyst Connor Campbell said: “The Dow Jones is set to break its own records when the bell rings on Wall Street, with the futures suggesting the index will cross the 21,200 mark. That’s because investors are getting excited about this afternoon’s non-farm jobs report.

“A huge ADP non-farm figure means the current forecasts for a 181k change in the number of employed people may be conservative, while for the past two months in a row the unemployment rate has unexpectedly shrank. Wage growth is the only real laggard, with average hourly earnings set to fall from 0.3% to 0.2% month-on-month.”

The payrolls report and unemployment rate are due at 1330 BST.

Despite the positive call for stocks, slumping oil prices could limit gains, with West Texas Intermediate and Brent crude down 3% to $46.94 a barrel and $49.15, respectively. Campbell said that following on from Thursday’s late drop - inspired by reports of increased oil output in Libya and the US - prices have tanked on the back of President Trump’s decision to remove America from the Paris climate agreement, sparking concerns that the country will ramp up its drilling, negating any output cap implemented by OPEC.

On the corporate front, Hovnanian Enterprises was among the companies slated to report earnings before the bell.

Lululemon Athletica was likely to be in focus after its first-quarter results released late on Thursday beat expectations, while RH Inc could be active after it tanked in late trade on Thursday as it cut its earnings outlook for the year.