By Johann M Cherian and Purvi Agarwal
(Reuters) -U.S. stock index futures were flat to marginally higher on Friday as investors held off on significant moves ahead of crucial payrolls data and tracked geopolitical tensions in the Middle East for potential escalations.
The Labor Department's nonfarm payrolls data, due at 8:30 a.m. ET, is expected to show that the economy maintained a moderate pace of job growth, while unemployment was steady in September. The figures could shed light on the central bank's policy trajectory for the remainder of the year.
If the numbers land close to projections, it would back up Fed Chair Jerome Powell’s suggestion that any further rate cuts are likely to be shallower than September’s 50-basis-point reduction, according to Derren Nathan, head of equity research at Hargreaves Lansdown.
"In the context of a worsening global geopolitical outlook, investors will be seeking reassurance from economic stability at home. Any unexpected signs of a weakening labor market could trigger a further dash for safe havens," Nathan said.
The labor market has been under greater scrutiny after the U.S. Federal Reserve slashed interest rates in September by a rare 50 basis points to stave off any further weakening in employment.
Odds of a 25 bps reduction at the Fed's November meeting stand at 69.5%, up from 46.7% a week ago, according to the CME Group's (NASDAQ:CME) FedWatch Tool.
Traders expect borrowing costs to fall by 66 bps before the year ends, down from nearly 79 bps a week ago, according to data compiled by LSEG, as recent reports pointed to strong service sector activity in September.
Dow E-minis were up 14 points, or 0.03%, S&P 500 E-minis were up 11 points, or 0.19% and Nasdaq 100 E-minis were up 61.75 points, or 0.31%.
Comments from New York Fed President John Williams before markets open will also be on investors' radar.
Wall Street's main indexes closed lower on Thursday and were set to finish the first week of October on a weaker footing as investors were nervous about escalating tensions in the Middle East and the workers' strike earlier this week.
Analysts said the events could impact the inflation and labor figures for October.
Energy stocks such as Occidental Petroleum (NYSE:OXY) edged higher 1.11%, while Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) crept up 0.9% each in premarket trading, as crude prices surged on concerns of supply disruptions in the Middle East due to the widening regional conflict.
The S&P 500 Energy sector is on track to log its biggest weekly jump since March 2023.
Meanwhile, ports on the East and Gulf Coasts began reopening late on Thursday after workers reached a wage deal, but clearing the cargo backlog will likely take time. U.S. shares of Zim Integrated Shipping Services were down 8.2%.
Among others, Spirit Airlines (NYSE:SAVE) nosedived 40% after a report showed the carrier was in talks with bondholders about the terms of a potential bankruptcy filing after its failed merger with JetBlue Airways (NASDAQ:JBLU).
Rivian (NASDAQ:RIVN) shed 8.5% after the EV startup cut its full-year production forecast and delivered fewer vehicles than expected in the third quarter.
Rate-sensitive growth stocks such as Tesla (NASDAQ:TSLA) and Amazon.com (NASDAQ:AMZN) climbed more than 1.2% each, while chip stocks including Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) were little changed.