U.S. Stock Futures Slip as Investors Mull Fed Policy Path

By Scott Kanowsky

Investing.com -- U.S. stock futures dropped on Thursday, as traders looked ahead to crucial U.S. labor market data that may provide clues to the possible roadmap for monetary policy tightening by the Federal Reserve.

At 07:28 ET (11:28 GMT), the Dow Futures contract was down 138 points, or 0.46%, S&P 500 Futures traded more than 20 points, or 0.53%, lower, and Nasdaq 100 Futures slumped 54 points, or 0.46%.

The declines would extend losses on Wall Street registered in yesterday's session, which brought an end to a brief but strong two-day rally. Equity markets, as well as U.S. government bonds, fell amid concerns that the Fed will keep interest rates higher for a longer period of time after data on Wednesday showed resilient demand in the American job market.

Focus now turns to how upcoming U.S. nonfarm payrolls figures will potentially determine the path of monetary policy. Signs of labor market strength in Friday's key report are expected to give the Fed impetus to keep aggressively hiking borrowing costs, which would likely be a negative signal for risk-driven assets.

"The key to tomorrow’s jobs report will be whether it keeps the hopes for a Fed pivot alive. If the jobs report is 'Too Hot' that kills the idea of a Fed pivot, and we should expect the S&P 500 to drop back towards levels where we ended the third quarter," Sevens Report analysts said in a note.

Investors will also have fresh weekly unemployment claims figures later today to pick at before the release of the nonfarm payrolls numbers.

In corporate news, Peloton Interactive Inc (NASDAQ:PTON) shares were up in premarket dealmaking after the exercise equipment company reportedly told staff that it plans to slash 500 jobs as management looks to restructure the business.

Twitter Inc (NYSE:TWTR) shares dipped in early hours trading as the drama over Elon Musk's $44 billion proposed buyout of the social platform continues to unfold, with negotiators reportedly now at work hashing out the details of the purchase.

Oil prices edged lower after nearing a three-week high. Brent Oil Futures for December fell 0.29% to $93.10 while Crude Oil WTI Futures also dropped by 0.33% to $87.47.

The moves come after the Organization of Petroleum Exporting Countries and its allies, which include Russia, agreed on Wednesday to slash production by 2 million barrels a day in a bid to support flagging oil prices. However, the decision could pour further fuel onto red-hot global inflation.

Elsewhere, gold futures rose by 0.25% to $1,725.05/oz, while EUR/USD exchanged hands at $0.9865.