Futures linked to U.S. stock indexes dipped on Friday, as investors exercised caution in anticipation of a crucial monthly jobs report that could influence the Federal Reserve’s upcoming interest-rate decision.
U.S. job growth likely surged in November after being severely constrained by hurricanes and strikes, but economists believe this might not signal a material shift in easing labor market conditions, which should allow the Fed to cut interest rates again this month.
“Recent Fed speakers have taken pains to leave all options open in December and the decision remains too close to call,” said Max McKechnie, global market strategist at J.P.Morgan Asset Management.
“However, if we do get strong payrolls data today, revisions to the Fed’s anticipated path for interest rates next year are all but guaranteed.”
Data at 8:30 a.m. is expected to show nonfarm payrolls likely increased by 200,000 jobs last month, while the unemployment rate is expected to climb to 4.2%, according to a Reuters survey of economists.
Currently, traders see a near 68% chance the Fed will cut interest rates by 25 basis points when it meets later this month, according to CME’s FedWatch Tool.
A preliminary reading of December U.S. consumer sentiment calculated by the University of Michigan is also due for release shortly after markets open on Friday.
Four Fed officials including San Francisco President Mary Daly and Governor Michelle Bowman are scheduled to make public appearances throughout the day, on the eve of a media blackout that kicks in on Saturday in the run-up to the central bank’s December 17-18 policy meeting.
U.S. stocks closed lower in the last session, with UnitedHealth (NYSE: UNH) down sharply and technology shares giving up some gains after a steady increase through the week.
Despite Thursday’s pullback, the S&P 500 and the Nasdaq were on track for their third consecutive weekly gains, while the blue-chip Dow was set for minor losses.
The three indexes are hovering near record highs as a relentless rally in heavyweight tech stocks – a bid to cash in on the euphoria around artificial intelligence – has led to robust gains throughout this year.
U.S. President-elect Donald Trump’s win in the November 5 election has been another recent tailwind for stocks. Analysts expect his tax cut policies and looser regulations could support corporate performance.
At 06:58 a.m., Dow E-minis were down 32 points, or 0.07%, S&P 500 E-minis were down 6 points, or 0.10% and Nasdaq 100 E-minis were down 11 points, or 0.05%.
Among early premarket movers, Ulta Beauty (NASDAQ: ULTA) advanced 11.9% after the cosmetics retailer raised its annual profit forecast, signaling a revival in demand for perfumes and makeup during the holiday shopping season.
Lululemon Athletica (NASDAQ: LULU) added 9.1% after the sportswear maker increased its full-year forecasts, betting on resilient demand for its athletic wear in the U.S. during the holiday shopping season as well as continued strength in its international business.
Hewlett Packard Enterprise (NYSE: HPE) gained 1.2% after the maker of AI servers beat Wall Street expectations for fourth-quarter revenue and profit on Thursday.
