US pre-open: Futures firmly in the red as recession fears reappear

Wall Street futures were firmly in the red ahead of the bell on Friday amid resurgent fears of a potential recession.

As of 1235 BST, Dow Jones futures were down 0.89%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.09% and 1.60% weaker, respectively.

The Dow closed 494.82 points lower on Thursday as a number of data points released throughout the session saw fears that it may be too late for the Fed to start cutting rates if it wants to avoid a recession send shares sharply lower.

Scope Markets' Joshua Mahony said: "Bad news for the economy appears to be bad news for markets, with US equities seeing sharp decline off the back of a worrying ISM manufacturing PMI survey yesterday. The faster pace of contraction in the manufacturing sector coupled with another push higher for US jobless claims does raise concerns that the restrictive actions taken by the Fed are finally rearing their ugly head. Understandably this puts a huge amount of emphasis on today’s jobs report, with any particular weakness likely to raise calls for a 50-basis point cut by the Fed in September.

"However, with the ISM survey pointing towards rising costs and contracting output, there is a fear that the Federal Reserve might be restricted if any economic weakness comes alongside continued inflation pressures. With that in mind, the market response to today’s payrolls and unemployment rate metrics look likely to be reliant on whether it comes alongside a rise or fall in average earnings."

Friday's primary focus will be July's nonfarm payrolls report, due out at 1330 BST, with analysts expecting to see 185,000 new jobs being added last month, down from 206,000 in June. The unemployment rate, meanwhile, was expected to be flat at 4.1%.

Corporate earnings were also in focus early on Friday after online retail giant Amazon missed Wall Street estimates with its second-quarter earnings and issued disappointing full-year guidance, while Intel shares sunk after announcing it would be making layoffs, and tech giant Apple shares ticked lower in pre-market trading despite posting a Q3 earnings beat.

Reporting by Iain Gilbert at Sharecast.com