Nasdaq futures lead markets lower ahead of crucial jobs report

U.S. futures retreated on Friday as investors braced for a crucial jobs report that will provide clues about the size of an expected interest rate cut this month and the resilience of the U.S. economy.

Tech stocks sank to lead decliners, with Nasdaq 100 futures (NQ=F) down 1.1 percent. S&P 500 futures (ES=F) retreated 0.6%, while Dow Jones Industrial Average futures (YM=F) fell 0.3%.

Despite the anemic close, stocks weakened this week as the market weighed incoming economic data for its potential to persuade the Federal Reserve to cut rates by more than 0.25 percent at its September meeting. Weaker labor market readings fueled debate over the chance of a 0.5% cut, but also raised concerns that the US is on the brink of recession.

Read more: Fed forecasts for 2024: What experts say about the possibility of a rate cut

Investors are now bracing for more volatility as they await the pivotal August jobs report, which is expected to show nonfarm payrolls rising to 165,000 when it is released at 8:30 am ET. The key question is whether the data confirms the cooling path outlined in the surprising July print or reveals that labor market weakness is overblown.

Going into the report, the market sees a 41 percent chance of a deeper rate cut from the Fed, compared with 30 percent a week ago, according to CME’s FedWatch tool.

Meanwhile, shares of chip maker Broadcom ( AVGO ) fell in premarket trading following a forecast of weak sales. While the Apple supplier is enjoying an increase in AI spending, its other divisions are falling short.