By Kanchana Chakravarty and Sukriti Gupta
(Reuters) -U.S. stock index futures were muted on Thursday as investors looked ahead to the monthly jobs report to gauge the impact of President Donald Trump’s trade policies on the labor market and the Federal Reserve’s interest rate trajectory.
Following Wednesday’s weaker-than-expected U.S. private jobs and services sector data, Friday’s non-farm payrolls report will come under sharp scrutiny as investors fear that Trump’s erratic trade policies will drive a slowdown in economic growth.
“The numbers weren’t so bad as to revive fears about a recession … investors were reluctant to over-interpret one day’s data, not least given the big test is coming tomorrow with the U.S. jobs report,” Jim Reid, global head of macro and thematic research at Deutsche Bank, said in a note.
“But, the data led investors to price in more rate cuts this year … and there’s growing confidence that we’ll see the first rate cut by September.”
The data comes ahead of the Fed’s policy decision later this month, where policymakers are widely expected to hold interest rates. Traders currently see at least two rate cuts by the end of this year, as per pricing in money markets.
Despite continued calls from Trump to slash interest rates, Fed Chair Jerome Powell has opted to stand pat so far, awaiting further data to help dictate the policy decision as tariff volatility prevails.
On Wednesday, Washington’s doubled tariffs on imported steel and aluminum came to effect and it also marked Trump’s deadline for trading partners to make their best offers to avoid other punishing import levies from taking effect in early July.
Investors focused on tariff negotiations between Washington and trading partners, with Trump and Chinese leader Xi Jinping expected to speak sometime this week as tensions simmer between the world’s two biggest economies.
U.S. equities rallied sharply in May, with investors boosting the S&P 500 index and the tech-heavy Nasdaq to their biggest monthly percentage gain since November 2023, thanks to a softening of Trump’s harsh trade stance and upbeat earnings reports.
The S&P 500 remains nearly 3% below record highs touched in February.
Data scheduled for Thursday include initial jobless claims and international trade data at 08:30 a.m. ET.
U.S. central bank officials including Fed Board Governor Adriana Kugler, Fed Kansas City President Jeffrey Schmid and Fed Philadelphia President Patrick Harker are scheduled to speak later in the day.
At 6:58 a.m. ET, Dow E-minis were up 15 points, or 0.04%, S&P 500 E-minis rose 2.25 points, or 0.04%, and Nasdaq 100 E-minis were higher 9.75 points, or 0.04%.
Most megacap and growth stocks were mixed in premarket trading. Tesla fell 1.8%.
Shares of MongoDB jumped 16.4% after the software company gave an upbeat annual forecast and reported quarterly results above estimates.
Chewy fell 2.6% after Jefferies downgraded the online pet products retailer to “hold” from “buy”.
(Reporting by Kanchana Chakravarty in Bengaluru; Editing by Maju Samuel)
