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Futures Regain Ground On Big Rise in Payrolls

Stock futures turned higher again after a government report Friday showed nonfarm payrolls jumped far more than expected in April, but trading remained volatile after a sharp market slide in the last session.

NYSE Traders
Oliver Quilla for CNBC.com
NYSE Traders

S&P 500 futures rose 5.7 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures gained 31 points, and Nasdaq 100 futures added 4 points.

Nonfarm payrolls grew at the fastest pace in four years in April as private sector employers ramped up hiring, raising the strong possibility that the labor market recovery may be picking up steam.

Employers added 290,000 jobs in April, the Labor Department said. The unemployment rate, however, rose to 9.9 percent as the size of the labor force increased.

Investors took some comfort on Germany approving an aid package for Greece, but earlier gains evaporated as European debt contagion

Major markets in Europe pared losses in midday trading. Germany's lower house approved a multi-billion-euro rescue package for Greece. Asian markets closed lower because of Wall Street jitters and fears over Europe's debt crisis.

The Dow ended Thursday's session down 347.80, or 3.2 percent, at 10,520.32, after being down as much as 998.50 earlier, the index's biggest intraday drop on record.

Investors and analysts were still struggling to understand what happened, with some blaming a trading error on the background of fears over the European debt crisis and exacerbated by high-frequency, algorithmic trading.

"We're trading it as a trader error," Tim Freeman, head of US derivatives sales at Capstone Global Markets, told CNBC. "It was not me, thank God. I would be in a bar in New York City drinking that one off."

Investor Jim Rogers told CNBC that the New York Stock Exchange should fix the problem quickly to maintain its reputation as the world's number one financial center but that the stock market correction is going to last for a while.

The Nasdaq made public the list of trades cancelled because of the glitch.

One crucial economic report will be released at 8:30 am New York time, when nonfarm payrolls for April are due.

Economists forecast an increase of 187,000, slightly more than the 162,000 jobs created in the previous month.

Investors will be watching developments in Europe, where the German parliament's lower house approved a bill on extending a multi-billion-euro aid package to Greece. The parliament's upper house is due to vote later in the day.

But anti-austerity rioting in the Balkan country of 11 million cast doubts on the government's ability to implement tough measures, pushing the euro lower against the dollar.

The European Debt Crisis - See Complete Coverage
The European Debt Crisis - See Complete Coverage

The pound plunged against the greenback too and UK stocks were lower as early results from Thursday's election pointed to a hung Parliament, with neither the opposition Conservatives nor the ruling Labour party getting a clear majority.

Treasury Secretary Tim Geithner is to hold a conference call with other G7 Finance ministers on the Greek and market situation, although little action is expected, CNBC has learned Thursday.