U.S. equity futures traded lower on Friday as investors assessed renewed geopolitical tensions in the Middle East and prepared for the release of closely watched U.S. employment figures. The latest developments have weakened expectations for a near-term resolution to the conflict involving Iran and added another layer of uncertainty to global markets.
At the same time, enthusiasm surrounding artificial intelligence-related stocks showed further signs of cooling after a mixed response to recent earnings announcements from major technology companies.
Futures Point to a Softer Open
By 03:36 ET (07:36 GMT), futures tied to the major U.S. indices were indicating a weaker start to trading. Dow Jones futures were little changed, while S&P 500 futures fell 0.6% and Nasdaq 100 futures declined 1.1%.
The technology-heavy Nasdaq Composite closed 0.1% lower in the previous session after semiconductor group Broadcom (NASDAQ:AVGO) released results that failed to fully satisfy elevated investor expectations.
The reaction weighed on several chipmakers, including Micron (NASDAQ:MU), Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD), all of which recorded notable declines.
Despite the weakness in technology stocks, the Dow Jones Industrial Average and the S&P 500 ended Thursday higher, gaining 1.7% and 0.4%, respectively.
Analysts at Vital Knowledge noted that “[T]he Broadcom disappointment […] triggered selling in certain semiconductor stocks and parts of the data center infrastructure complex but rather than cause a broad market slump, money instead simply rotated elsewhere, including pockets of value/cyclical.”
Hezbollah Rejection Complicates Peace Prospects
Investor sentiment was also affected by developments in the Middle East after Hezbollah rejected a ceasefire agreement between Israel and Lebanon.
The move has raised fresh doubts over the possibility of a broader diplomatic breakthrough between Washington and Tehran. Iran, which supports Hezbollah, has repeatedly linked progress in negotiations with the United States to an end to hostilities in Lebanon.
The conflict has expanded since the joint U.S.-Israeli military campaign against Iran began in late February, drawing other parts of the region into the confrontation.
Hezbollah leader Naim Kassem described the U.S.-brokered ceasefire arrangement as “absurd, humiliating, and insulting.”
According to the Associated Press, the statement followed Israeli attacks that reportedly killed at least four people. The agency also reported that Lebanese troops moved into areas of southern Lebanon on Thursday after months of intense fighting.
Oil Prices Remain Elevated Despite Modest Pullback
The ongoing standoff between the United States and Iran continues to impact energy markets, particularly through disruptions affecting the Strait of Hormuz, a critical route for global oil shipments.
Brent crude futures were last down 0.4% at $94.69 per barrel, while U.S. West Texas Intermediate crude fell 0.6% to $92.44 per barrel. Although prices have eased from recent highs, they remain significantly above levels seen before the conflict escalated.
Market participants remain concerned that a prolonged disruption to energy supplies could reignite inflationary pressures globally and influence the policy decisions of major central banks.
Current market expectations suggest the Federal Reserve is likely to keep interest rates unchanged through the remainder of this year, with some investors anticipating the possibility of rate increases in 2027.
Labor Market Report in Focus
Attention now turns to the latest U.S. nonfarm payrolls report, which is due later in the day and could provide important clues about the strength of the economy.
Economists expect the U.S. to have added approximately 85,000 jobs in May, compared with 115,000 in April. The unemployment rate is forecast to remain unchanged at 4.3%.
While payroll figures are considered the most comprehensive measure of labor market health, other employment indicators released this week have pointed to continued resilience, even as companies remain cautious about expanding or reducing headcount.
The report is expected to play an important role in shaping expectations for future Federal Reserve policy decisions under new Chair Kevin Warsh, who faces the challenge of balancing inflation risks against employment objectives.
Report Says U.S. Explored Equity Stakes in AI Companies
Separately, NOTUS reported that senior U.S. government officials have held preliminary discussions with leading artificial intelligence companies regarding the possibility of the government acquiring ownership stakes in their businesses.
According to the report, the conversations focused on voluntary share transfers to the government.
NOTUS said OpenAI chief executive Sam Altman discussed the concept with senior officials in the Trump administration, while rival Anthropic was reportedly not involved in discussions concerning government ownership.
The report added that any investment returns could potentially be directed toward public initiatives, including dividend-style payments to American households.