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U.S. equity futures edged lower in early Friday trading, and remain on pace for a modest weekly gain, as investors look to a key job market reading prior to the opening bell that could cement bets on an end-of-year rate cut from the Federal Reserve.
Stocks drifted lower on Thursday, with a big decline for UnitedHealth Group UNH dragging the Dow Jones Industrial Average 250 points into the red, as markets pullback back from the December record run heading into today’s November jobs report.
Economists expect the report, due at 8:30 am Eastern time, to show a big rebound from October’s hurricane and strike-affected 12,000 tally, the lowest in four years, with a headline gain of around 202,000 new hires.
Wage pressures, however, are likely to ease as other job market readings show that Americans are finding it harder to secure a higher-paying position companies keep new hiring to a minimum into the end of the year.
A hotter-than-expected reading in wages or job gains could stoke concerns for renewed inflation pressures and pare bets on a December Fed rate cut. A softer report would add fuel to the market’s forecast for an end-of-year cut and further reductions into the second half of next year.
Fed Chair Jerome Powell has said the central bank will be ‘data dependent’ in determining each of its next interest rate decisions.
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The CME Group’s FedWatch tool pegs the odds of a quarter point rate cut later this month in Washington at around 68.5%.
On Wall Street, stocks are set for a muted open heading into the jobs report, with futures contracts tied to the S&P 500 indicating a 5 point opening bell decline and those linked to the Dow suggest a 20 point dip.
The tech-focused Nasdaq is called 6 points lower in very light premarket volume.
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Oil prices were also trading lower following a decision by the OPEC cartel, as well as non-member allies such as Russia, to delay reducing their coordinated output cuts until April, suggesting ongoing concern for global demand.
Brent crude futures contracts for February delivery, the world’s pricing benchmark, fell 54 cents to $71.55 per barrel while WTI contracts for January, which are tightly-linked to U.S. gasoline prices, fell 51 cents to $67.79 per barrel.
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In Europe, the regional Stoxx 600 benchmark edged 0.3% higher in mid-day Frankfurt trading, while Britain’s FTSE 100 was little-changed from last night’s close in London.
Overnight in Asia, the region-wide MSCI ex-Japan index rose 0.22% into the close of trading, while Japan’s Nikkei 225 ended the week 0.77% lower in Tokyo.
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