Strong start seen for stocks
Futures pull out of their slump on upbeat jobs reports, shrugging off anxiety about Bank of America's reported shortfall.
NEW YORK†(CNNMoney.com) -- Wall Street was poised for a strong open Wednesday as investors focused on two upbeat jobs reports, shrugging off anxiety about the bank stress test results due out Thursday.
At 8:43 a.m. ET, the Dow Jones industrial average, S&P 500 and Nasdaq-100 futures were all higher.
Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.
Brighter jobs outlook. Outplacement firm Challenger, Gray & Christmas Inc. reported that the number of layoffs announced in April fell for the third straight month. While the cuts mark the lowest total since last October, the April figure was still 47% higher than job cuts announced in the same month a year ago.
A report from ADP Payroll Services showed a 491,000 decline of private sector jobs in April. That's much better than the 643,000 drop that economists had predicted, according to consensus from Briefing.com. ADP reported a loss of 742,000 jobs in March.
Dan Cook, senior market analyst at IG Markets, called the ADP report "extremely positive" and "the best number we've seen in quite a while."
But Cook remained cautious ahead of reports on jobless claims and unemployment due out later this week. He said he needs to see more positive signs before he's convinced that the job market is improving.
"If we get a great sign on Friday on the back of this one, I might start believing a little bit about the green shoots [of recovery]," he said.
U.S. stocks slumped Tuesday as investors pulled back after the recent rally and geared up for the upcoming release of bank stress tests.
Todd Leone, head trader at Cowen & Co., said the reports of Bank of America's huge shortfall is largely to blame for the early-morning declines in futures.
"People were talking about a $10 billion gap," said Leone, noting that the real shortfall could be more than triple that amount.
Banks: Regulators are due to reveal the results of their stress tests on 19 of the largest U.S. banks Thursday, but results are already leaking out.
In the run-up to the official release, speculation has been brewing that anywhere between 10 and 14 of the banks could be forced to boost their capital.
International: The Hang Seng index in Hong Kong closed lower. European markets were higher.