U.S. stock futures wavered Friday morning as investors buckled up for critical monthly employment data.
The Labor Department is set to release its August jobs report at 8:30 a.m. ET.
Futures tied to the S&P 500 teetered just below the flatline after the benchmark index staged a major comeback in the prior trading session to reverse a drop of more than 1% and close firmly higher. Contracts on the Dow Industrial Average slipped slightly below breakeven after paring a 300-point loss Thursday to cap the day up 150 points. Futures tied to the Nasdaq Composite were off by 0.1%.
Government data is likely to show another month of strong hiring despite a streak of larger-than-anticipated rate hikes by Federal Reserve policymakers to cool economic growth in an effort to mitigate inflation.
Nonfarm payrolls likely rose by slightly cooler 300,000 in August, according to data from Bloomberg. In July, the economy added a whopping 528,000 jobs. Still, monthly job gains would remain robust on a historical basis if the estimate is realized, as monthly payroll gains averaged about 164,000 per month in 2019.
Investors will be laser-focused on Friday’s data after Fed Chair Jerome Powell asserted in a hawkish speech at the Jackson Hole symposium last week that he is willing to accept weaker labor conditions in exchange for cooling prices.
“If there is a conflict in the Fed’s two mandates as they work to slow inflation, Chair Powell ranks price stability head and shoulders above maximum employment,” Jeff Klingelhofer, co-head of investments at Thornburg Investment Management said in a note on Friday.
Shares of Lululemon (LULU) soared nearly 10% ahead of market open after the athletic apparel retailer reported quarterly earnings that topped Wall Street estimates. The company also lifted its annual profit and revenue guidance above analysts forecasts as wealthy customers snap up its new accessory offerings.
Broadcom (AVGO) shares also rose Friday morning after the chipmaker delivered a strong sales outlook for the current quarter, quelling fears of a recessionary decline in chip demand.
While some better-than-feared financials this season have helped buoy sentiment, many strategists have recently sounded the alarm on imminent weakness in earnings.
According to Morgan Stanley’s Mike Wilson, while the first half of the year was dictated by Federal Reserve policy and tighter financial conditions, the second half will be determined by earnings expectations for next year.
“As a result, equity investors should be laser focused on this risk, not the Fed, particularly as we enter the seasonally weakest time of the year for earnings revisions, and inflation further eats into margins and demand,” Wilson said.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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