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Stocks hover before employment report

David Russell (david.russell@optionmonster.com)

Stocks are hovering before this morning's big employment report.

S&P 500 futures are fractionally higher, while markets across the Atlantic are down slightly ahead of the number from the Labor Department at 8:30 a.m. ET. It's expected to show the addition of 159,000 jobs last month, down from 165,000 in April. Economists forecast the unemployment rate will remain at 7.50 percent.

The S&P 500 bounced yesterday, ending the session up 0.85 percent after finding support below the key 1600 level and its 50-day moving average. It had slid from a peak of 1687 earlier in the month, so the big question now facing investors is whether the recent pullback is a buying opportunity or the start of a deeper correction.

Asian markets were weak despite yesterday's gains on Wall Street, with China falling more than 1 percent and Tokyo down fractionally. The decline comes as the Japanese yen continues to gain strength against all other major currencies.

The direction of interest rates is another major uncertainty facing investors. Treasury bonds sold off last month, driving down utilities, telecom and real-estate stocks, which are owned for their dividend yields. Utilities, however, are the best performing of the nine major sectors in the last week, suggesting that they may be ready to rebound. (See our researchLAB market scanner for more.)

Next week's calendar is very light in terms of events and economic news, with retail sales and jobless claims on Thursday as the main scheduled items.

In other noteworthy headlines, Germany's central bank lowered its economic-growth forecast for the country. Former Federal Reserve Chairman Alan Greenspan said investors should prepare for higher interest rates.

The strong yen is the main story in the foreign-exchange market. The one-time high-flying Australian dollar also resumed its recent slide as weak global growth weighs on the country's economy.

Commodities are more positive, with energy and agricultural products fractionally higher and metals down less than 1 percent.

In company-specific news, retailer Gap is up more than 1 percent after reporting strong same-store sales for May. Cloud-computing stock Equinix is down about 10 percent after saying the Internal Revenue Service didn't immediately approve its conversion into a real-estate investment trust.

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