US futures point lower ahead of crucial August jobs report

Investing.com — US stock futures hovered below the flatline on Friday, as investors awaited a much-anticipated labor market report that could factor into the Federal Reserve’s next monetary policy decision.

By 06:21 ET (10:21 GMT), the Dow futures contract had shed 130 points or 0.3%, S&P 500 futures had slipped by 34 points or 0.6%, and Nasdaq 100 futures had fallen by 207 points or 1.1%.

The 30-stock Dow Jones Industrial Average and benchmark S&P 500 both finished the prior session in the red, while the tech-heavy Nasdaq Composite gained.

Trading was choppy on Thursday, as investors parsed through data showing that US employers hired the fewest number of workers since 2021 in August. But worries over a deterioration in the American labor market were somewhat soothed by separate figures suggesting a decline in jobless claims and expansion in services sector activity.

So far this month, the S&P 500 has shed more than 2.5%, although, historically, September is viewed as a weaker month for stocks.

“[T]he global equity mood remains somber, as prices extend their recent declines amid continued concerns about the outlook for growth,” analysts at Vital Knowledge said in a note to clients, adding that optimism around artificial intelligence is “fading” in the wake of results from US chipmaker Broadcom (more below).

Nonfarm payrolls ahead

Economists are predicting that the US economy added 164,000 jobs last month, an increase from 114,000 in the prior month. The July total, which was far below expectations, sparked a broader market downturn as traders fretted over the possibility of a US recession.

This time, the data could play heavily into how the Federal Reserve approaches potential interest rate cuts at the central bank’s two-day gathering on Sept. 17-18.

There is a roughly 59% chance the Fed will choose to slash borrowing costs, which currently stand at a 23-year high of 5.25% to 5.5%, by 25 basis points, according to the CME Group’s (NASDAQ:CME) closely-monitored FedWatch Tool.

However, another downbeat payrolls figure may exacerbate concerns over a slump in the jobs picture and, some analysts are predicting, persuade the Fed to roll out a deeper 50-basis point reduction.

Broadcom sales outlook underwhelms

Shares in Broadcom (NASDAQ:AVGO) slumped by more than 9% in premarket US trading after the group’s current-quarter sales guidance slightly disappointed investors’ expectations.

The firm projected that it would deliver $14 billion in revenue in its fourth quarter, just under estimates of $14.04 billion, according to LSEG data cited by Reuters. The forecast was seen as a sign of possible sluggishness in the company’s non-AI-related operations.

The AI segments, however, remained strong, Broadcom said. The firm once again raised its outlook for full-year sales of AI parts and custom chips to $12 billion, up from its prior forecast of more than $11 billion during the period.

Other chip stocks, including artificial intelligence-darling Nvidia (NASDAQ:NVDA) and peer Advanced Micro Devices (NASDAQ:AMD), declined following Broadcom’s report. Marvell Technology (NASDAQ:MRVL) and Micron Technology (NASDAQ:MU) were also lower ahead of the opening bell.

Crude steadies with job market data looming

Oil prices were higher in early European trading as investors awaited the nonfarm payrolls report and considered both a large withdrawal from US crude inventories and a planned output delay from OPEC+ producers.

At 06:21 ET, the Brent contract added 0.5% to $73.05 per barrel, while U.S. crude futures (WTI) traded up by 0.5% at $69.50 a barrel. Both contracts were on pace to post declines for the week.

Analysts quoted by Reuters said investors were taking some caution ahead of the jobs data, particularly after the previous month’s figure triggered a sell-off across global markets.

Elsewhere, crude stockpiles dipped by 6.9 million barrels to 418.3 million barrels during the week ended on Aug. 30, according to the US Energy Information Administration on Thursday. Analysts had forecast a draw of 1 million barrels, Reuters reported.

The OPEC+ group of producers, meanwhile, said it had agreed to postpone a planned increase in oil production for October and November.

Despite support from these developments, Brent settled an over one-year low on Thursday due in part to persistent fears over demand in the US and China.

Reuters contributed to this report.