Futures contracts tied to the Dow Jones Industrial Average jumped on Friday after the release of U.S. employment data for August.
Dow futures traded 200 points higher, or 0.7%. S&P 500 futures were up by 0.3%.
The U.S. unemployment rate fell to 8.4% last month from 10.2% in July. Economists polled by Dow Jones expected the rate to decline to 9.8%. As for overall jobs creation, employment in the U.S. grew by 1.37 million in August, topping an estimate of 1.32 million.
Bank stocks rose following the data release as Treasury yields climbed. Citigroup, Bank of America and JPMorgan Chase were all up at least 2%. Wells Fargo climbed 1.9%. The benchmark 10-year Treasury yield rose to 0.66%. The 30-year bond rate advanced to 1.4%.
However, gains were capped as tech stocks remained under pressure. In premarket trading Friday, Apple was lower by 2.5%. Tesla, which plunged 9% on Thursday, fell by 5% in the premarket. Facebook, Amazon and Netflix were also in the red in early trading. Nasdaq 100 futures dropped 0.6%.
The Dow slid more than 800 points, or 2.8%, on Thursday for its biggest one-day decline since June. The S&P 500 plunged 3.5% and the Nasdaq Composite dropped 5%. Thursday’s declines also wiped out the major averages’ gains for the week and knocked both the S&P 500 and Nasdaq off record levels.
As a sector, tech had its worst day since March, falling 5.83%. Apple contributed a big portion of those losses, falling 8%. Facebook, Amazon, Netflix, Alphabet and Microsoft also closed Thursday’s session sharply lower.
The steep declines in tech shares come after the space drove the lion’s share of the broader market’s comeback off the coronavirus sell-off lows. Since March 23, the S&P 500 tech sector is up about 70%. For the year, tech has rallied more than 30%.
However, some investors have raised concern about the heavy concentration of gains in just a few stocks as it could make the broader market susceptible to a pullback if those names were ever in trouble.
“We’ve had excessive valuations in the markets lately — particularly in the tech sector — and that needed to be corrected to some degree,” said Scott Knapp, chief market strategist at CUNA Mutual Group. “One needs to look no further than the recent irrational run-up in Tesla and Apple share prices after both companies announced a stock split to see overexuberance, especially among retail investors.”
Both Tesla and Apple rallied recently after announcing stock splits.
Dow futures were stronger as investors bid higher plays on the reopening of the economy. Shares of Boeing, airlines and cruise lines were higher in the premarket. Bank stocks like Citigroup and Morgan Stanley were also higher in premarket trading.