US Stock Futures Flat Ahead of Crucial Nonfarm Payrolls Report

U.S. stock index futures remained mostly unchanged on Friday as markets reopened after the July 4 holiday. Investors eagerly awaited the release of the Labor Department’s non-farm payrolls report, which is expected to provide further insight into the labor market’s condition.

A softer reading of the report, indicating a slowdown in job growth, could strengthen the case for a Federal Reserve interest rate cut in September. This expectation has been fueled by recent economic data, including weaker-than-expected ADP employment and weekly jobless claims reports.

Earlier in the week, data revealed a decline in services sector activity to a four-year low and a surprising slump in factory orders, further bolstering market anticipation of multiple rate cuts this year.

Analysts at ING emphasized the need for a significant slowdown in payroll figures below 150,000 to trigger a substantial repricing in Fed rate expectations to the dovish side, citing the June Fed Dot Plot and rising probability of a Trump win in November as hawkish counterweights.

Current market predictions, as per CME Group’s FedWatch Tool, indicate a greater than 74% probability of a September interest rate cut, up from 64% last week.

Despite the holiday-shortened week and light trading volumes, both the S&P 500 and the Nasdaq achieved record closing highs on Wednesday. The strong performance of top technology stocks in the first half of the year contributed significantly to these gains.

As the second-quarter earnings season approaches, market participants are closely watching whether the rally will extend beyond megacap stocks and if their earnings can continue to justify their high valuations.

New York Fed President John Williams acknowledged the U.S. economy’s strong performance but emphasized that the Fed still has “a way to go” to achieve its 2% inflation target.

In premarket trading, Tesla saw a 1.2% increase, while Macy’s surged 6.3% following a report of a revised buyout bid. Conversely, cryptocurrency-related stocks like Coinbase, Riot Platforms, and Marathon Digital suffered losses of 5%-6% after Bitcoin plunged to a four-month low due to concerns about potential selling pressure from defunct Japanese exchange Mt. Gox and leveraged players.