Investing.com -- Stock futures on Wall Street edge lower ahead of the publication 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:AVGO) sales outlook underwhelms analysts' expectations, sending shares in the artificial intelligence chipmaker lower in extended-hours trading.
1. Futures inch lower
US stock futures hovered just below the flatline on Friday, as investors awaited a much-anticipated labor market report that could factor into the Federal Reserve's next monetary policy decision.
By 03:45 ET (07:45 GMT), the Dow futures contract had shed 165 points or 0.4%, S&P 500 futures had slipped by 38 points or 0.7%, and Nasdaq 100 futures had fallen by 210 points or 1.1%.
The 30-stock Dow Jones Industrial Average and benchmark S&P 500 both finished the prior session in the red, while the tech-heavy Nasdaq Composite gained.
Trading was choppy on Thursday, as investors parsed through data showing that US private employers hired the fewest number of workers since 2021 in August. But worries over a deterioration in the American labor market were somewhat soothed by separate figures suggesting a decline in jobless claims and expansion in services sector activity.
So far this month, the S&P 500 has shed more than 2.5%, although, historically, September is viewed as a weaker month for stocks.
2. Crucial nonfarm payrolls report ahead
The main event on this week's economic calendar is Friday's release of the August nonfarm payrolls report from the Labor Department's Bureau of Labor Statistics.
Economists are predicting that the US economy added 164,000 jobs last month, an increase from 114,000 in the prior month. The July total, which was far below expectations, sparked a broader market downturn as traders fretted over the possibility of a US recession.
This time, the data could play heavily into how the Fed approaches potential interest rate cuts at the central bank's two-day gathering on Sept. 17-18.
There is currently a roughly 59% chance the Fed will choose to slash borrowing costs, which currently stand at a 23-year high of 5.25% to 5.5%, by 25 basis points, according to the CME Group's (NASDAQ:CME) closely-monitored FedWatch Tool.
However, another downbeat payrolls figure may exacerbate concerns over a slump in the jobs picture and, some analysts are predicting, persuade the Fed to roll out a deeper 50-basis point reduction.
3. Broadcom sales outlook disappoints
Shares in Broadcom slumped in after-hours trading after the US chipmaker's current quarter sales guidance underwhelmed investors' expectations.
The firm projected that it would deliver $14 billion in revenue in its fourth-quarter, just under analysts' expectations of $14.04 billion, according to LSEG data cited by Reuters.
Speaking in a post-earnings call, Broadcom executives flagged weakness in its broadband unit, reporting that revenue in the segment dropped by 49% in the third quarter.
The result tempered strength in demand for the California-based company's critical artificial intelligence-optimized chips. Broadcom once again raised its outlook for AI revenue to $12 billion for the fiscal year, up from its prior forecast of more than $11 billion during the period.
Echoing results from AI semiconductor giant Nvidia (NASDAQ:NVDA) last week, Broadcom's numbers missed sky-high expectations, with investors now on the lookout for any signs that a recent boom in AI chip demand may be fading.
4. Seven & i rejects Couche-Tard offer
The board of 7-Eleven owner Seven & i Holdings (TYO:3382) has turned down a $38.5 billion cash bid from Canada's Alimentation Couche Tard (TSX:ATD), arguing in a letter made public on Friday that the offer was not in the best interest of its shareholders.
Seven & i added that Couche-Tard's $14.86 per share cash proposal, which would be the biggest-ever foreign buyout of a Japanese firm, was "opportunistically timed" and would likely face stiff antitrust hurdles in the US. The combined company would be the largest player in the the US convenience store industry.
The group said it was open to "sincerely consider" any proposals, but noted that it would "resist" any plan that "deprives our shareholders of the company's intrinsic value that fails to specifically address very real regulatory concerns."
Alex Miller, the incoming Chief Executive Officer of Circle-K owner Couche-Tard, said in a post-earnings call on Thursday that the company would be able to finance and finalize the deal.
5. Oil steadies
Oil prices were higher in early European trading as investors awaited the nonfarm payrolls report and considered both a large withdrawal from US crude inventories and a planned output delay from OPEC+ producers.
At 03:46 ET, the Brent contract added 0.5% to $73.06 per barrel, while U.S. crude futures (WTI) traded up by 0.5% at $69.48 a barrel. Both contracts were on pace to post declines for the week.
Analysts quoted by Reuters said investors were taking some caution ahead of the jobs data, particularly after the previous month's figure triggered a sell-off across global markets.
Elsewhere, crude stockpiles dipped by 6.9 million barrels to 418.3 million barrels during the week ended on Aug. 30, according to the US Energy Information Administration on Thursday. Analysts had forecast a draw of 1 million barrels, Reuters reported.
The OPEC+ group of producers, meanwhile, said it had agreed to postpone a planned increase in oil production for October and November.
Despite support from these developments, Brent settled an over one-year low on Thursday due in part to persistent fears over demand in the US and China.