(Reuters) – U.S. stock index futures fell on Friday ahead of key employment data that could be crucial when the Federal Reserve decides on the size of a rate cut expected later this month.
The August nonfarm payrolls figure, due at 8:30 a.m. ET, is the last crucial labor market data before the September meeting of the U.S. central bank and is expected to show a 160,000 increase in jobs. compared to 114,000 in July. The unemployment rate is expected to decrease from 4.3% to 4.2% in August.
“The key question is of course how the Fed will react following today’s labor market data… a 50 basis point cut could be seen as an implicit admission that the Fed is behind the curve,” said Teeuwe Mevangen, senior macro strategist at Rabobank, thus.
The labor market has come under scrutiny after an unexpected rise in unemployment fueled fears of a recession, sending the tech-heavy Nasdaq more than 10% into correction territory and sending global markets into a sell-off nearly a month ago.
Traders’ bets on a 25 basis point rate cut in September are now at 57%, according to CME Group’s FedWatch Tool, while those on a 50 basis point rate cut have risen to 43% from 30% a week ago.
Markets will also analyze comments from New York Fed President John Williams and Fed Governor Christopher Waller for their insights on the data and resulting central bank policies.
At 5:21 a.m. ET, the Dow E-minis were down 161 points, or 0.39%, the S&P 500 E-minis were down 38.5 points, or 0.70%, and the Nasdaq 100 E-minis were down 233 .5 points, or 1.23%.
The S&P 500 and the blue-chip Dow hit more than three-week lows on Thursday as a series of mixed economic data fueled uncertainty about the pace of monetary policy easing.
September was historically weak for US stocks, with the benchmark S&P 500 down an average of about 1.2% for the month since 1928.
The S&P 500 is on track for a weekly decline of more than 2%, the steepest decline in nearly five months, led by a nearly 5% decline in technology stocks.
Broadcom fell 9.6% after the chipmaker forecast fourth-quarter revenue slightly below expectations, due to sluggish spending in its broadband segment.
Other chip stocks such as Nvidia and Marvell Technology each fell 2.2%, while Advanced Micro Devices fell 1.2%. The Philadelphia SE Semiconductor index is poised for its biggest weekly drop in more than a month.
Mobileye Global fell 4.9% after a report that top shareholder Intel is exploring a sale of part of its stake in the automotive technology company.
US Steel rose 3%. A letter shows that Japan’s Nippon Steel is trying to address the US government’s concerns about the proposed takeover of US Steel.
Samsara gained 5.2% after the software company raised its annual revenue forecast.
(Reporting by Johann M Cherian in Bengaluru; Editing by Shounak Dasgupta)