Nasdaq, S&P, Dow futures retreat ahead of May payrolls

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Stocks index futures are lower Friday with another major voice warning of a troubled economy. But direction at the open will likely be dictated by the employment report.

Elon Musk is reportedly looking at cutting 10% of Tesla’s workforce and has a “super bad feeling” on the economy. Jamie Dimon roiled the market earlier this week with his economic hurricane remarks.

Nasdaq 100 futures (NDX:IND) -0.6%, S&P futures (SPX) -0.3% and Dow futures (INDU) -0.2% are lower.

“The S&P 500 is now +0.45% on the holiday shortened week, as it looks to make it back-to-back weekly gains for the first time in two months,” Deutsche Bank’s Jim Reid said.

The May jobs report arrives before the bell with economists predicting a gain of 325K in nonfarm payroll and the jobless rate ticking down to 3.5%.

“The US employment report has been out of fashion for the past two years,” UBS chief economist Paul Donovan wrote. “First it was Covid case numbers, then it was consumer spending driven by pandemic savings which made employment a secondary concern. Now the employment report is hip and trendy and back in fashion (much like economists).”

“Employment will matter more in the coming months because income and job security will matter more. With pandemic savings now spent (at least for low income households), consumption will be dictated by income – or income plus access to credit,” he said. “As demand normalizes, whether firms start firing workers will matter to the balance of consumer spending and saving. Recent recruitment problems suggest firms will be reluctant to fire, but may be slower to hire.”

The 10-year Treasury yield is up 1 basis point to 2.93%, with the 2-year up 1 basis point to 2.65%.

“The relative calm in sovereign yields helped drive equity indices higher on both sides of the Atlantic,” Reid said.