Stock futures reduce losses after August employment report

Futures for major U.S. stock indices traded lower on Friday, but recovered from earlier losses after highly anticipated labor market data showed fewer new jobs were created than economists expected, while the unemployment rate fell slightly.

S&P 500 and Nasdaq 100 futures lost 0.1% and 0.3%, respectively, while Dow Jones Industrial Average futures fell 0.1%. The S&P 500 closed three straight sessions lower, and all three major indexes are expected to post weekly losses.

U.S. equity markets got off to a sluggish start this month as concerns about the health of the economy resurfaced and market participants closely scrutinized every data release. Employment indicators have gained importance as Federal Reserve officials increasingly emphasized concerns about a cooling labor market as a key factor in their decisions as they consider cutting interest rates for the first time in four years.

The U.S. Labor Department's August employment report, released early Friday, showed that U.S. employers added 142,000 jobs last month, more than July's revised figure of 89,000, but less than the 161,000 jobs economists expected. The unemployment rate fell to 4.2% in August, from 4.3% in the previous month, in line with expectations.

According to CME Group's FedWatch tool, which forecasts interest rate movements based on fed funds futures trading data, market participants are now pricing in a 51 percent chance that the Fed will cut its influential benchmark interest rate by half a percentage point at its next meeting on Sept. 18. That's up from the 39 percent priced in on Friday. Fed Chairman Jerome Powell has hinted that rate cuts could come later this month, but said upcoming data will influence decisions about the pace and intensity of easing.

The yield on 10-year government bonds, which is closely correlated with expectations regarding interest rate developments, fell below 3.70 percent on Friday morning for the first time since early August, when the last jobs report sent the markets into turmoil.

Among the stocks that rose in premarket trading on Friday, AI investor favorite Nvidia (NVDA) rose about 1%, leading a broader advance in mega-cap technology stocks that had been slipping ahead of jobs data. Apple (AAPL), Alphabet (GOOGL), Meta Platforms (META) and Amazon (AMZN) all gained, while Microsoft (MSFT) was little changed.

Broadcom (AVGO) shares fell more than 6% after the chipmaker giant reported quarterly results that beat analysts' expectations but gave a weak revenue outlook.

Gold futures rose slightly to around $2,550, while bitcoin rose to nearly $57,000 after hitting its lowest level in about a month at below $56,000 on Thursday.