Futures Inches Lower, NFPs Advance, Broadcom Outlook

Investing.com — Wall Street futures fell ahead of this week’s all-important labor market report, which could influence the size of a possible Federal Reserve interest rate cut later this month. Broadcom’s (NASDAQ: ) sales outlook beat analysts’ expectations, sending the artificial intelligence chipmaker’s stock lower in after-hours trading.

1. Futures inch lower

U.S. futures were just below the flat line on Friday as investors awaited a highly anticipated labor market report that could factor into the Federal Reserve’s next monetary policy decision.

By 03:45 ET (0745 GMT), the contract was down 165 points, or 0.4 percent, down 38 points, or 0.7 percent, and down 210 points, or 1.1 percent.

30 shares and the benchmark ended the previous session in the red, while tech-heavy gained.

Trading was choppy on Thursday as investors weighed data showing that US private employers hired the fewest workers since 2021 in August. But concerns about a deteriorating U.S. labor market were somewhat assuaged by separate figures that suggested a drop in jobless claims and expanding activity in the services sector.

So far this month, the S&P 500 is down more than 2.5%, although historically September is seen as a weaker month for stocks.

2. Essential reports of non-agricultural payroll before

The main event on the economic calendar this week is Friday’s release of the August nonfarm payrolls report from the Labor Department’s Bureau of Labor Statistics.

Economists forecast the US economy added 164,000 jobs last month, up from 114,000 the previous month. July’s total, which was well below expectations, triggered a broader market decline as traders worried about the possibility of a US recession.

This time, the data could play a big role in how the Fed approaches potential interest rate cuts at the central bank’s two-day meeting on September 17-18.

There is currently about a 59% chance the Fed will choose to cut borrowing costs, currently at a 23-year high of 5.25% to 5.5%, by 25 basis points basis, according to the closely watched CME Group (NASDAQ: FedWatch tool.

However, another weak payrolls figure may exacerbate concerns about a slowdown in the jobs picture and, some analysts predict, persuade the Fed to introduce a deeper cut of 50 basis points.

3. Broadcom’s sales outlook disappoints

Broadcom shares fell in after-hours trading after the US chipmaker’s sales guidance for the current quarter beat investors’ expectations.

The company forecast revenue of $14 billion in the fourth quarter, just below analysts’ expectations of $14.04 billion, according to LSEG data cited by Reuters.

Speaking on a post-earnings call, Broadcom executives signaled weakness in its broadband unit, reporting that revenue from the segment fell 49% in the third quarter.

The result tempered the strength of demand for the California-based company’s critical AI-optimized chips. Broadcom again raised its outlook for artificial intelligence revenue to $12 billion for the fiscal year, up from a previous estimate of more than $11 billion in the period.

Echoing results from AI semiconductor giant Nvidia (NASDAQ: ) last week, Broadcom’s numbers missed soaring expectations, with investors now looking for any signs that a recent boom in demand for AI chips may be fading.

4. Seven & rejects Couche-Tard’s offer

The board of 7-Eleven owner Seven & i Holdings ( TYO: ) rejected a $38.5 billion cash offer from Canada’s Alimentation Couche Tard (TSX: ), arguing in a letter made public Friday that the offer was not in the best interest. of its shareholders.

Seven & added that Couche-Tard’s $14.86 per share cash proposal, which would be the largest-ever foreign takeover of a Japanese firm, was “opportunistically timed” and would likely face tough hurdles antitrust in the US. The combined company would be the largest player in the US convenience store industry.

The group said it was open to “sincerely considering” any proposal, but noted it would “resist” any plan that “deprives our shareholders of the intrinsic value of the company that fails to specifically address regulatory concerns very real”.

Alex Miller, incoming chief executive of Circle-K owner Couche-Tard, said in a post-earnings call Thursday that the company would be able to finance and complete the deal.

5. Oil stabilization

Oil prices were higher in early European trade as investors awaited the non-farm payrolls report and factored in both a big draw in US crude inventories and a planned production delay from OPEC+ producers.

At 03:46 ET, the contract added 0.5% to $73.06 a barrel, while futures (WTI) traded up 0.5% to $69.48 a barrel. Both contracts were on track to post declines for the week.

Analysts cited by Reuters said investors took some caution ahead of the jobs data, particularly after the previous month’s figure triggered a selloff in global markets.

Elsewhere, crude oil inventories fell by 6.9 million barrels to 418.3 million barrels in the week ended Aug. 30, according to the US Energy Information Administration on Thursday. Analysts had forecast a draw of 1 million barrels, Reuters reported.

Meanwhile, the OPEC+ producer group said it had agreed to delay a planned increase in oil output to October and November.

Despite support from these developments, Brent hit a more than one-year low on Thursday due in part to lingering concerns about US and Chinese demand.