Stock futures inch higher ahead of key jobs report

U.S. stock index futures were little changed during overnight trading on Thursday, ahead of Friday’s key jobs report.

Futures contracts tied to the Dow Jones Industrial Average gained 65 points. S&P 500 futures advanced 0.2%, while Nasdaq 100 futures added 0.3%.

During regular trading the Dow fell 170 points, or 0.47%, while the S&P declined 0.1%. Both are on track for their first negative week in three. The Nasdaq Composite slid 0.13% for its seventh negative session in the last eight.

All eyes are on Friday’s nonfarm payrolls report. Economists are expecting the economy to have added 422,000 jobs in December, according to estimates compiled by Dow Jones. The unemployment rate is expected to come in at 4.1%.

“Homebase data points to surging payrolls in December, but December figures will not yet capture the impact of the surging Omicron variant on employment,” noted Lauren Goodwin, economist and portfolio strategist at New York Life Investments.

U.S. weekly jobless claims totaled 207,000 for the week ended Jan. 1, the Labor Department said Thursday. The reading was higher than the expected 195,000. But the private sector added 807,000 jobs in December, ADP said Wednesday, which was significantly higher than the expected 375,000.

Stocks’ declines over the last two days follow the release of the minutes from the Federal Reserve’s December meeting. The central bank is ready to dial back its economic help at a faster rate than some had anticipated.

“A shift in Fed policy often injects volatility into markets,” said Keith Lerner, chief market strategist at Truist. “Stocks have generally had positive performance during periods where the Fed is raising short-term rates because this is normally paired with a healthy economy.”

“The dip in stocks seems a bit overdone,” added UBS Global Wealth Management in a note to clients. “The normalization of Fed policy shouldn’t dent the outlook for corporate profit growth, which remains on solid footing due to strong consumer spending, rising wages, and still-easy access to capital.”

The yield on the 10-year U.S. Treasury hit 1.75% on Thursday, sharply higher than last week’s 1.51% level. The move higher has hit growth-oriented areas of the market, since promised future profits start to look less compelling. The tech-heavy Nasdaq Composite is on track for its worst week since February 2021 as investors rotate out of growth and into value names.