By Ankika Biswas and Lisa Pauline Mattackal
(Reuters) – U.S. stock index futures traded flat to slightly higher on Friday as markets reopened after the July 4 holiday, with investors hoping a crucial employment report would be the latest piece of data to confirm further weakness in the labor market.
The Labor Department’s report due at 8:30 a.m. ET is expected to show non-farm payrolls rose by 190,000 in June after advancing by a sharply higher 272,000 jobs in May. The unemployment rate is forecast to remain unchanged at 4%, and average hourly earnings are seen rising 0.3%.
A softer reading would potentially boost the chances of a Federal Reserve interest rate cut in September, following on the heels of the ADP Employment and weekly jobless claims reports this week which signaled easing labor market conditions.
Earlier this week, data showed a measure of services sector activity dropped to a four-year low and factory orders slumped unexpectedly.
Taking cues from the data points, market participants strengthened their bets for multiple rate cuts this year.
“To see a major repricing in Fed rate expectations to the dovish side … we may need to see payrolls slow below 150k, considering the June Fed Dot Plot and rising perceived probability of a Trump win in November work as hawkish counterweights,” analysts at ING said.
Chances of a September interest rate cut have risen to more than 74% from last week’s 64%, according to CME Group’s (NASDAQ:) FedWatch Tool.
That helped the and the Nasdaq notch record closing highs during Wednesday’s holiday-shortened trading. With the equity market also staying shut for U.S. Independence Day on Thursday, trading volumes have been light throughout the week.
At 7:16 a.m. ET, were down 10 points, or 0.03%, were up 1.25 points, or 0.02%, and were up 32.25 points, or 0.16%.
All the three major Wall Street indexes are poised for weekly gains, after high-momentum top technology stocks steered the S&P 500 and the Nasdaq to strong gains in the first half of the year.
With second-quarter earnings on the horizon, it remains to be seen whether Wall Street’s rally will broaden beyond major megacap stocks and whether earnings for those companies can continue to support steep valuations.
New York Fed President John Williams said on Friday that while the U.S. economy was doing “remarkably well,” there was still a “way to go” for the Fed to bring inflation back to its 2% target.
Among premarket movers, Tesla (NASDAQ:) rose 1.2% after hitting its highest level since early January on Wednesday.
Macy’s (NYSE:) climbed 6.3% after a report said Arkhouse Management and Brigade Capital raised their bid to buy the department store chain for about $6.9 billion.
Cryptocurrency-related stocks including Coinbase (NASDAQ:) Global, Riot Platforms (NASDAQ:) and Marathon Digital (NASDAQ:) lost 5%-6% after bitcoin slumped to a more than four-month low as traders fretted over the likely dumping of tokens from defunct Japanese exchange Mt. Gox and further selling by leveraged players.
