U.S. stocks were on track to finish the week on a high note as futures extended gains after an upbeat employment report pointed to continued improvement in the labor market.
The U.S. economy added 255,000 jobs last month, which follows a strong gain in June, showing the economy is still quite healthy despite somewhat slower growth. The unemployment rate was unchanged at 4.9% even as the labor-force participation rate edged up to 62.8%, suggesting the labor market is tightening. There was also an uptick in wages.
Futures for the Dow Jones Industrial Average rose 90 points, or 0.5%, to 18,364, while S&P 500 index futures gained 7 points, or 0.3%, to 2,166. Nasdaq-100 index futures climbed 18 points, or 0.4% points, to 4,762.
Still, the gains in the market were modest, as investors began pricing in the impact of the jobs report on the Federal Reserve's monetary policy.
Expectations for a rate increase this year, going by the CME FedWatch tool, increased after the jobs report. The tool now indicates an 18% chance of a rise in September, a 20% chance in November and 43% in December.
The muted gains follow a mostly flat close on Thursday, when investors brushed off aggressive monetary easing at the Bank of England and stuck to the sidelines. The S&P 500 index closed virtually flat at 2,164.25, while the Dow average also ended near break-even at 18,352.05.
For the week, the main indexes are likely to finish flat, with only the Nasdaq Composite Index is set for a small gains.