Jobs anxiety

Futures lower in early trading as traders wait to see if May report can keep bond yields low.

June 3, 2005: 7:06 AM EDT

NEW YORK (CNN/Money) - Investors anxiously awaited the May employment report Friday, a reading that is seen as key to whether the low interest rates that have lifted stocks this week will continue.

U.S. stock futures were slightly off in early trading, indicating a lower opening for stocks. But that could quickly change after the 8:30 a.m. ET report, especially if it shows a weaker-than-expected employment outlook.

Treasury prices have rallied and yields have fallen this week on the belief that a weaker economic outlook and lower inflationary pressures could prompt the Federal Reserve to stop our pause in its course of interest rate hikes sooner rather than later. But a weaker-than-expected jobs report, especially one that showed little wage gains, could help lift bond prices and stocks once again.


Economists surveyed by Briefing.com forecast that U.S. employers added 175,000 jobs in May after a 274,000 rise in April, while the unemployment rate is forecast to stay at 5.2 percent. Hourly wages are seen rising 0.2 percent, down from a 0.3 percent increase in April.

Treasury prices were little changed, leaving the yield on the 10-year note at the 3.90 percent level reached late Thursday. The dollar lost ground against on the euro and the yen.

Oil prices were higher in early trading, after falling for the first time in a week Thursday.

The July light crude contract gained 54 cents to $54.17 a barrel in electronic trading, while the July contract for Brent crude rose 53 cents to $52.93

Major markets in Asia closed higher Friday, and major European markets were little changed in early trading.

In corporate news, L-3 Communications Holdings (Research) announced Friday that it has agreed to acquire fellow defense contractor Titan (Research) for $23.10 a share. That represents little premium for Titan shareholders, who have seen shares rise more than 20 percent in recent weeks on speculation of a deal.

The Journal also reported that Bank of America (Research), the nation's No. 3 bank, is under investigation by state and federal authorities for possible securities and money-laundering violations for allegedly helping two Texas entrepreneurs shelter more than $100 million from U.S. taxes. A spokeswoman for the bank said it is cooperating in the investigations and believes it followed the law.