Nasdaq Futures Rise As Broadcom Earnings, Fed Rate Cut Hopes Boost Mood — Job Report Now The Key Test

U.S. stock futures climbed early Friday as traders braced for the August non-farm payrolls report. A softer-than-expected report or one that aligns with expectations could add evidence to the weakening of the job market and push the Federal Reserve to its first cut since December 2024.

Economists, on average, expect the Bureau of Labor Statistics (BLS) to report job gains of 75,000 for August, slightly higher than the 73,000 jobs added in July, potentially marking the fourth straight month of sub-100,000 job gains.

The unemployment rate is expected to tick up one-tenth of a percentage point to 4.3%. The average hourly wage, a measure of inflation, is estimated to have risen 3.8% year-over-year (YoY), which is slower than the 3.8% rate observed in July.

Fund manager Louis Navellier said, “We are in an environment where bad news will be considered good news, since financial markets are expecting a key interest rate cut by the FOMC on September 17th.”  That said, the overbought levels of the market could temper some of the optimism unless the job gains are very anemic. 

The CME FedWatch Tool, which is based on expectations from futures traders, shows the odds of a 25-basis-point Fed funds rate cut at the September meeting at 99.4%.

As of 4:50 a.m. ET on Friday, the Nasdaq 100 futures climbed 0.47%, thanks to a positive reception to  Broadcom’s (AVGO) quarterly print. The S&P 500 futures added 0.24%, and the Russell 2000 futures increased 0.09%, while the Dow futures was marginally higher.

On Thursday, the S&P 500 Index pushed to a new closing high, although it could not go past its intraday high, and the Nasdaq Composite and the Dow Jones Industrials also recorded significant gains. The positive sentiment is traced back to a rise in weekly jobless claims and a smaller-than-expected private payroll gain reported by ADP.

The Institute for Supply Management’s (ISM) non-manufacturing purchasing managers’ index (PMI) showed a stronger-than-expected expansion by the sector in August.

The SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S&P 500 Index, jumped 0.84%, and the Invesco QQQ Trust (QQQ) rallied 0.91%. Meanwhile, the SPDR Dow Jones Industrial Average ETF Trust (DIA) and the iShares Russell 2000 ETF (IWM) advanced 0.84% and 1.25%, respectively.

ABM Industries (ABM) is scheduled to release its earnings report before the market opens.

Crude oil futures slid further early Friday, and gold futures edged down but stayed above the $3,600 level. The 10-year U.S. Treasury note yield, which fell below the 4.2% level on Thursday, edged down further. The dollar was weaker against all major counterparts ahead of the release of the jobs data.

The major Asian markets closed Friday’s session notably higher on hopes of a U.S. rate cut, with the Japanese market receiving an additional boost from the formalization of the trade deal with the U.S.

European stocks have opened on a firmer note.

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