Nasdaq futures gain ahead of crucial US jobs report

Wall Street ended lower on Friday as a stronger-than-expected August jobs report reignited concerns that the Federal Reserve could keep interest rates higher for longer. The Dow Jones fell 272 points, or 0.5%, to 53,414, while the S&P 500 dropped 0.4% to 7,719 and the Nasdaq slipped 0.3% to 26,507.

The August nonfarm payrolls report showed the US economy added 162,000 jobs, well above the consensus estimate, providing fresh evidence of resilience in the labor market. The surprise strength pushed investors away from riskier assets and toward defensive sectors as expectations for a September rate hike firmed.

Bank of America said the jobs report largely reversed the decline in September hike pricing that followed dovish comments from Fed Governor Christopher Waller on Thursday, with markets now pricing in just under a 60% chance of a hike. The bank added that if August core PCE inflation comes in at 0.24% month over month or higher, the odds of a September hike could move above 50%. Such a scenario could also put pressure on the Fed, as holding rates steady despite higher hike expectations could raise questions about its credibility and potentially push longer-term Treasury yields higher.

Next week will be a shortened trading week following the Labor Day holiday, with US markets reopening Tuesday. The earnings calendar will also be relatively quiet, although Oracle and Adobe are both due to report Thursday.