U.S. equity futures moved lower on Thursday as investors adopted a cautious stance ahead of the closely watched U.S. employment report, while easing oil prices and renewed weakness in semiconductor stocks also influenced market sentiment.
The monthly non-farm payrolls report is expected to provide fresh clues on the Federal Reserve’s next interest rate decisions, making it the key event of the holiday-shortened trading week.
Futures slip before payrolls release
By 07:13 GMT, futures tracking the major U.S. indices were trading lower. Dow Jones Industrial Average futures fell 95 points, or 0.2%, S&P 500 futures declined 22 points, or 0.3%, and Nasdaq 100 futures dropped 250 points, or 0.8%.
Wall Street closed lower in the previous session, weighed down by another sell-off in semiconductor shares following reports that Meta Platforms is exploring ways to commercialise surplus artificial intelligence computing capacity.
Investor sentiment was partly supported by comments from Federal Reserve Chair Kevin Warsh, who acknowledged that inflation risks had eased. However, he reiterated that he would not provide forward guidance on interest rates and remained committed to restoring price stability.
Weaker-than-expected U.S. private payrolls and manufacturing data also encouraged investors to scale back expectations of a July interest rate increase, according to analysts at Deutsche Bank.
Payrolls report expected to guide Fed outlook
Markets are now focused on the release of the June U.S. non-farm payrolls report.
Economists expect the U.S. economy to have created 114,000 jobs during the month, compared with 172,000 in May, while the unemployment rate is forecast to remain unchanged at 4.3%.
Non-farm payrolls have exceeded expectations in each of the past three months, lifting the three-month average to 188,000, the highest level in two years.
The resilience of the labour market had previously supported expectations that the Federal Reserve would have room to raise interest rates further to contain inflation. However, those expectations have softened this week after private-sector employment data pointed to weaker hiring momentum.
Oil declines as Iran negotiations continue
Oil prices extended their recent decline as investors assessed signs of progress in indirect negotiations between the United States and Iran.
Talks held in Doha concluded without a final agreement, although Qatari officials described the discussions as making positive progress. U.S. President Donald Trump said his representatives held “very good meetings” in Qatar, while Vice President JD Vance confirmed that negotiations remain ongoing.
The prospect of reduced tensions and continued shipping through the Strait of Hormuz has helped push crude prices back towards levels seen before the recent conflict, easing concerns about energy-driven inflation.
Deutsche Bank analysts said, “[T]he newsflow helped to bring oil prices down and ease investor concern about inflation.”
Asian semiconductor stocks come under pressure
Semiconductor shares across Asia declined after reports suggested leading artificial intelligence companies are becoming more efficient in their use of computing resources.
According to The Information, OpenAI has developed software improvements capable of significantly reducing the computing power required to operate some ChatGPT services. Separate reports also indicated that Meta is considering offering surplus AI computing capacity through a cloud platform.
The developments prompted concerns that AI companies may require fewer new chips than previously expected.
Major declines were recorded in Samsung Electronics, SK Hynix, Advantest, Tokyo Electron and Taiwan Semiconductor Manufacturing Co.
U.S. preparing voluntary AI standards
The Financial Times reported that the Trump administration could introduce voluntary standards for advanced artificial intelligence models as early as next week.
The proposed framework would establish common voluntary benchmarks for evaluating powerful AI systems before public release, replacing the current case-by-case regulatory approach.
The initiative follows recent government interventions involving advanced AI models, including temporary export restrictions on Anthropic’s latest systems and requests for OpenAI to initially limit access to its upcoming GPT-5.6 model.