Stock Futures Rise Ahead of August Jobs Report and Fed Rate Cut Decision

TLDR

Table of Contents

Stock futures rose Friday as investors await key August jobs report data due at 8:30 a.m. ET
Traders are pricing in 99% chance of Federal Reserve interest rate cut in September meeting
S&P 500 futures up 0.2%, Nasdaq futures jumped 0.4%, Dow futures remained flat
August jobs report expected to show 80,000 jobs created with unemployment staying at 4.2%
Recent weak labor data including higher jobless claims has strengthened rate cut expectations

Stock futures climbed early Friday as investors prepared for the August jobs report that could shape Federal Reserve policy decisions. The S&P 500 futures gained 0.2% following the index’s record closing high on Thursday.

Nasdaq futures led the gains with a 0.4% increase while Dow Jones Industrial Average futures remained mostly flat. All three major indexes posted gains Thursday after weak labor market data reinforced expectations for Fed rate cuts.

The Bureau of Labor Statistics will release the August jobs report at 8:30 a.m. ET on Friday. Economists forecast the creation of 80,000 jobs for the month, up from July’s 73,000 additions.

The unemployment rate is expected to hold steady at 4.2% according to analyst projections. This data comes after Thursday’s reports showed fewer private-sector jobs created than expected in August.

Jobless claims also rose to their highest level since mid-June, adding to concerns about labor market softening. These developments have pushed trader expectations for a September rate cut to 99% probability according to CME’s FedWatch tool.

JUST IN 🚨: The odds of a September rate cut now stand at 96% pic.twitter.com/xwr3HRRjx9
— Barchart (@Barchart) September 3, 2025

Federal Reserve Rate Cut Expectations Build

The weak labor data has solidified market bets that the Fed will lower borrowing costs at its September 17 meeting. Traders currently see a quarter-point reduction as almost certain based on recent economic indicators.

Markets remain divided on whether the central bank will implement two or three rate cuts by year-end. The upcoming jobs report and next week’s consumer price index data will provide key insights before the Fed’s decision.

Deutsche Bank strategist Jim Reid called Friday “the first of the three massive days for markets in the next nine business days.” Growing labor market weakness has become a primary concern following last month’s unexpectedly poor jobs report.

Barclays Private Bank strategist Julien Lafargue noted that while small differences in job numbers matter, it would take a much stronger report to challenge current rate cut expectations. The market has largely priced in the Fed’s dovish pivot based on recent economic softening.

Political and Trade Developments Impact Markets

President Trump’s Fed governor nominee Stephen Miran testified before the Senate, stating he would not withdraw from his White House role if confirmed to the central bank. Trump continues pushing for the removal of Fed governor Lisa Cook and an FTC commissioner.

On trade policy, Trump signed an order Thursday implementing the US-Japan trade deal. The agreement establishes 15% tariffs on imports from Japan as part of the administration’s trade strategy.

The Supreme Court is reviewing a case that could potentially invalidate most of Trump’s existing tariffs. This legal challenge adds uncertainty to current trade policy implementation.

Corporate earnings results showed mixed performance after market close. Lululemon stock declined after the retailer cut forecasts due to weakening demand and tariff concerns.

Broadcom shares moved higher following earnings that demonstrated strong AI chip demand growth. The 10-year Treasury yield ticked up to 4.167% while the US Dollar Index dropped 0.2% to 98.11.

The August jobs report will provide the next major data point for Fed policy decisions ahead of the September meeting.

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