US open: Stocks flat ahead of Labor Day, despite tax reform news

A 'noisy' US jobs report for August alongside mixed readings on the economy has left Wall Street trading on a mixed note ahead of the long Labor Day weekend.

At 1514 BST, the Dow Jones Industrial Average was higher by 0.26% or 58.27 points at 22,011, as the S&P 500 tacked on 0.19% or 4.41 points to 2,476, alongside a 0.17% or 4.13 point advance for the Nasdaq Composite that took it to 6,428.

Acting as a backdrop, overnight US Treasury Secretary Steve Mnuchin told CNBC the White House already had a "very detailed" tax plan ready.

Meanwhile, oil prices were lower as Hurricane Harvey paralysed more than a quarter of the US refining industry. West Texas Intermediate was down 0.94% to $46.79 a barrel on the NYMEX. Gasoline futures were also lower on profit-taking, falling 3.0% to $1.7259 a gallon.

ETX Capital's Neil Wilson commented, "The US dollar was driven down and then snapped back to trade almost flat after a weaker-than-expected jobs report left traders searching for direction. Although a miss it looks like this print isn’t doing anything to alter projections for what the Federal Reserve will do later this month or for the rest of the year.

"The labour market remains in fine health, wage growth is AWOL and inflation lacklustre – nothing has changed today. One swallow doesn’t make a summer and one August jobs miss doesn’t make for a weakening labour market. Markets have already decided the Fed probably won’t hike again this year."

America's job market created 156,000 new posts last month (consensus: 180,000) and, at 0.1% on the month, wage growth fell short of expectations (again).

The details of the report were similarly lacklustre, when not worse, although so-called 'underemployment' as measured by the U6 rate of joblessness was modestly improved, Barclays's Michael Gapen said in a research note sent to clients.

Nevertheless, several economists were quick to point out that August was historically a "noisy month" (Gapen included).

Hence, he said: "We continue to look for an announcement on balance sheet normalization at the September FOMC meeting and see a rate hike in December as still likely, pending further incoming data on inflation and the outcome of potential near-term disruptions to activity, including Hurricane Harvey and the pending deadlines to raise the debt ceiling and extend the federal budget."

Fed funds futures were slightly higher versus where they were early on Thursday, assigning 42% odds to a December rate hike from the Fed.

Economists at Goldman Sachs on the other hand were reportedly slightly more optimistic, telling clients they saw a 55% chance of an end of year increase in rates.

On the positive side of the ledger, separate readings from ISM and IHS Markit on factory sector activity in August both edged past forecasts.

Construction output however weakened noticeably, shrinking by 0.6% on the month (consensus: 0.5%).

Consumer confidence in the States also undershot forecasts, printing at 96.8 at the end of August, up from 93.4 for end July but lower than a preliminary estimate of 97.6.