Dow futures flat; payrolls release prompts caution

Investing.com -- U.S. stock futures traded largely unchanged Friday, as investors await the release of the widely-watched monthly jobs report as it could provide some clues into the Federal Reserve's policy outlook.

By 06:50 ET (10:50 GMT), the Dow Futures contract was largely flat, S&P 500 Futures traded 3 points, or 0.1%, lower and Nasdaq 100 Futures dropped 23 points, or 0.2%.

The major indices closed sharply lower Thursday after stronger-than-expected employment data revived fears that the Federal Reserve will continue to raise interest rates, potentially pushing the world’s largest economy into recession.

Labor market looks resilient

Stronger than expected ADP private payroll numbers on Thursday indicated that the labor market remains resilient, even after a year-long tightening cycle. The Fed has already signaled it sees more rate hikes ahead despite pausing in June, and futures traders see rates rising another quarter of a percentage point when the Fed meets later in July.

The June jobs report is due later in the session, and is expected to show the economy added 225,000 jobs in June, while average hourly earnings are expected to rise 0.3% for the month and 4.2% for the year, a slight cooling from the previous month.

A hotter-than-expected report could provide the Fed policymakers with more room to lift interest rates even further, likely curbing economic activity even more.

Yellen meets with Chinese premier

U.S. Treasury Secretary Janet Yellen met with Chinese Premier Li Qiang earlier Friday, on the second day of her three-day visit, telling him, in prepared remarks, that the U.S. is seeking a healthy competition with China, not a "winner-take-all" approach.

The U.S. "in certain circumstances, [will] need to pursue targeted actions to protect its national security," she added. "We may disagree in these instances. However, we should not allow any disagreement to lead to misunderstandings that unnecessarily worsen our bilateral economic and financial relationship."

Twitter responds to new social media threat

In corporate news, the tech sector is likely to be in the spotlight following reports that Twitter has threatened to bring legal action against Meta Platforms (NASDAQ:META) over its new Threads app, as the brewing rivalry between the two social media firms intensifies.

Threads, which was launched by Meta as a "friendly" alternative to Twitter earlier this week, netted over 30 million sign-ups in less than 24 hours, according to chief executive Mark Zuckerberg.

Additionally, Bloomberg reported earlier Friday that Tesla (NASDAQ:TSLA) is laying off some battery production workers at its Shanghai plant.

Crude rises after fall in U.S. inventories

Oil prices rose Friday, on course for a second consecutive positive week following a larger-than-expected fall in U.S. oil stocks, suggesting resilient demand by the largest consumer of crude in the world.

Official data from the Energy Information Administration, released on Thursday, showed that U.S. inventories shrank by 1.5 million barrels, more than expected in the week to June 30.

By 06:50 ET, the Brent contract climbed 0.3% to $76.77, while U.S. crude futures traded 0.3% higher at $72.03 a barrel. Both benchmarks were set to gain about 2% for the second straight week.

Additionally, gold futures rose 0.4% to $1,923.05/oz, while EUR/USD edged 0.1% lower to 1.0881.

(Oliver Gray contributed to this item.)

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