North American markets opened mixed, as a weaker-than-expected U.S. jobs report that hinted of little wage inflation averted a continuation of the punishing selloff seen on Thursday and inspired a bit of bargain hunting among investors.
In early trading, the S&P/TSX composite index was up 23 points, or 0.1 per cent, at 15,354; the S&P 500 was up 1 point, or 0.07 per cent, at 1,932; and the Dow Jones industrial average was down about 4 points at 16,558.
U.S. nonfarm payrolls in July rose by a net 209,000 new jobs, below the 230,000 that was expected and below June's gain of 288,000. The unemployment rate unexpectedly rose a notch to 6.2 per cent, although that was attributed to more people entering the workforce.
The jobs report eased fears somewhat that the U.S. Federal Reserve will soon be forced to hike interest rates in response to an accelerating economy and growing inflationary pressures.
On Thursday, in a report that typically doesn't grab a lot of attention, the U.S. said its employment cost index rose on a larger-than-expected increase in wages. That could push up inflation and prompt the Federal Reserve to start tightening monetary policy. The Dow tumbled 317 points Thursday, its worst day in months, wiping out all of its remaining gains for the year. The TSX fell 194 points.
But today's jobs report found that average hourly earnings in July rose only 1 cent. That left the annual rate of increase at 2.0 per cent, a level that provides the Fed ample room to keep interest rates near record lows.
Market players are clearly shifting their expectations for the first rate hike. Based on futures contracts, traders see about 79 per cent odds that the Fed will raise its benchmark interest rate to at least 0.5 per cent by September 2015, according to Bloomberg. The figure was less than 70 per cent on July 1.
A number of other concerns were blamed for the selloff Thursday, ranging from some surprisingly weak corporate earnings reports to the ongoing geopolitical worries in places such as Ukraine and Gaza. There was also the debt default in Argentina, which highlighted the precarious debt positions of some overseas governments.
But market players were particularly concerned that the Federal Reserve's first interest rate hike in years could be approaching faster than many had expected, at a time when equity markets have long seemed overdue for a pullback after a multi-year bull market left valuations looking stretched.
In overseas markets today, European market players were further discouraged after ArcelorMittal, the giant steelmaker, lowered its full-year profit forecast, sending shares in the company tumbling more than 6 per cent. Meanwhile, a batch of purchasing managers indexes showed that growth in the euro zone manufacturing sector eased slightly in July. The Stoxx 600, a broad index of U.S. equities, is down 1.2 per cent.
PMI manufacturing data was also released for China today, and the reports reinforced recent evidence that the growth rate in the giant economy is moving upwards again. China's official purchasing manager's index rose to a better-than-expected 51.7 in July, improving from a reading of 51 in June. Meanwhile, a similar PMI reading from HSBC also came in at 51.7, an 18-month high. The Shanghai market fell 0.7 per cent while Japan's Nikkei was down 0.6 per cent.
Here's a look at some key stocks in the news and moving today:
Enbridge reported Q2 adjusted EPS of 40 cents versus the Street estimated 39 cents. Shares opened down 0.1 per cent.
Bell Aliant reported Q2 EPS of 39 cents (Canadian), 2 cents below Street estimates. Revenue of $683-million slightly missed the consensus of $686-million. But shares rose 0.7 per cent at today's open.
Procter & Gamble reported Q3 EPS of 95 cents (U.S.) versus the Street consensus of 91 cents. Shares rallied 3.3 per cent at today's open.
Weyerhaeuser reported EPS of 40 cents, higher than the average analyst estimate of 35 cents. Shares opened up 1.6 per cent.
LinkedIn late Thursday reported earnings and revenue above Street expectations. Shares are up 8 per cent.
Tesla Motors posted second-quarter revenue that nearly doubled from the prior year, while its adjusted earnings topped expectations. Shares are up nearly 5 per cent.
Catamaran reported quarterly EPS that was 3 cents better than estimated. It also beat on revenues and raised the bottom end of its EPS and revenue guidance for fiscal year 2014. Shares are up 2.7 per cent.