U.S. stock futures moved higher early Friday ahead of the September jobs report. Nasdaq 100 futures gained about 0.7 to 0.8 percent, S&P 500 futures rose 0.5 percent, and Dow futures were up roughly 0.5 to 0.6 percent in early trading — Dow e-minis up 259 points at 04:59 a.m. ET, according to Reuters.
Oil prices fell sharply at the same time. West Texas Intermediate crude, the U.S. benchmark, dropped nearly 4 percent to about $89 a barrel, while front-month Brent crude, the international benchmark, fell 2.4 to 2.7 percent to roughly $99.50 to $99.90 — sliding back below $100.
The immediate trigger was a Reuters report that European Union countries have discussed a French proposal to release diesel supplies, under pressure from Washington, which has urged Europe to "immediately" tap emergency diesel reserves or face a potential U.S. export ban. News of recovering crude shipments through the Strait of Hormuz added to the relief. The energy-market calm arrived with no new de-escalation in the Middle East conflict — The Wall Street Journal reported the U.S. is sending a third aircraft-carrier strike group and an additional Marine expeditionary unit to the region.
The 8:30 a.m. ET release of September nonfarm payrolls is the week's main event. Consensus expects job gains of roughly 84,000 to 90,000, a slowdown from August, with the unemployment rate holding steady at 4.1 percent.
The reading will shape expectations for the Federal Reserve's October 28 meeting. The CME FedWatch tool shows traders pricing a 74 to 76 percent chance the Fed leaves rates unchanged — up from 29 percent a week ago — while the implied probability of a hike has collapsed from 64 percent to about 22 percent. Fed officials have said in recent days they have time to study inflation data before acting, while stressing that inflation remains too high.
Bond-market volatility has been the week's dominant story. On Thursday, the 10-year Treasury yield spiked to 5.344 percent — its highest since 2002 — and the 30-year yield touched a 24-year high before both reversed lower. The 10-year hovered around 5.22 to 5.23 percent on Friday morning. The pullback gave equities room to breathe: on Thursday, the Dow and Nasdaq each gained 0.04 percent while the S&P 500 advanced 0.19 percent, bouncing from key technical levels. Entering Friday, the three indexes were still down for the week — 1.7 percent, 1 percent and 0.7 percent, respectively.
Global markets joined the relief: Canada's TSX futures edged 0.2 percent higher, and Reuters reported calmer bond markets worldwide ahead of the U.S. payrolls data.
Chip stocks and megacaps led the premarket advance: Nvidia rose nearly 0.9 percent, Broadcom and AMD added about 1 percent each, and Alphabet and Tesla both climbed close to 1 percent. Tesla reports deliveries before the open. Micron Technology reversed higher on surging earnings and guidance, and optical leader Lumentum cleared a key level.
The laggards were led by Nike, which plunged more than 10 percent after forecasting a steeper-than-expected annual revenue decline and announcing layoffs. Seagate and Western Digital also fell hard.
What comes next depends on the payrolls number. A soft print could pull short-term yields lower and further cool hike expectations, extending the rally; a hot one would revive the higher-for-longer narrative — and the tug-of-war between bonds and stocks would grind on.