US open: Stocks rise as jobs data cements expectations for a Fed pause

Wall Street stocks rose on Friday morning after a much-anticipated labour-market report showed an unexpected rise in US unemployment, raising hopes that the Federal Reserve will hold off from tightening monetary policy any further at its next meeting.

The Dow Jones Industrial Average was up 0.5%, the S&P 500 rose 0.4% while the Nasdaq was 0.1% higher, with traders in an optimistic mood heading into a three-day weekend – markets will be closed on Monday for Labor Day.

According to the Bureau of Labor Statistics, non-farm payrolls rose by 187,000 from July, well ahead of the 170,000 consensus forecast, but data for July was revised down to 157,000 from 187,000 initially reported and June's figures were revised to 105,000 from 185,000 initially.

The unemployment rate pushed up to 3.8% in August from 3.5% the month before, versus expectations for no change. The figures also showed that average hourly earnings rose just 0.2% on the month.

Nancy Vanden Houten, lead US economist at Oxford Economics, said the report will leave the Fed "plenty of room to leave policy steady" at this month's policy meeting. "The trend in job growth continued to slow, the unemployment rate rose, labor force participation increased, and earnings growth decelerated, all signs that the supply and demand for labor are coming into better balance," Vanden Houten said.

Analyst Craig Erlam from Oanda said the raft of data over recent days – which included a JOLTS survey showing a fall in job vacancies to a two-and-a-half-year low – "will have come as a huge relief for the Fed".

"To be clear, the Fed won't get carried away with today's report," Erlam said. "It's just one that needs to be repeated on a number of occasions but there's plenty of cause for optimism in there. If there was any doubt that the Fed will pause in September, today's report surely puts an end to that debate."

Meanwhile, the ISM manufacturing purchasing managers' index was also released, showing that the contraction in activity lessened slightly last month, with the PMI improving from 46.4 to 47.6. While a level below 50 still indicates a decline, the consensus forecast was 47.

Dell soars

Tech giant Dell surged over 20% after delivering second-quarter adjusted earnings of $1.74 per share, up just 4% year-on-year but well ahead of the $1.14 expected by analysts. Management also gave stronger-than-expected guidance for the current quarter and full year.

Workout gear group Lululemon was also in demand, rising 4.4% after impressing with its quarterly results, raising its forecasts after a strong performance in China.

Eos Energy Enterprises was a big mover, jumping 26% after the energy storage company received a loan commitment of nearly $400m from the Department of Energy.