U.S. stock futures declined on Friday following Thursday’s rally. Futures of major benchmark indices were lower.

The Donald Trump administration on Thursday urged the D.C. Federal Appeals Court to allow the firing of Federal Reserve Governor Lisa Cook to take effect before the central bank's interest rate-setting meeting next week.

Meanwhile, Dow closed above the 46,000 mark for the first time on Thursday, despite gloomy economic data. U.S. inflation accelerated to 2.9% year-over-year in August, while weekly jobless claims spiked to 263,000 – their highest level since October 2021.

The 10-year Treasury bond yielded 4.04% and the two-year bond was at 3.56%. The CME Group's FedWatch tool‘s projections show markets pricing a 100% likelihood of the Federal Reserve cutting the current interest rates for the Sept. 17 decision.

The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, were mixed in premarket on Friday. The SPY was down 0.10% at $656.95, while the QQQ advanced 0.0068% to $584.12, according to Benzinga Pro data.

Cues From Last Session

Most sectors on the S&P 500 closed on a positive note, with consumer discretionary, health care, and materials stocks recording the biggest gains on Thursday.

However, energy stocks bucked the overall market trend, closing the session slightly lower. This broad strength helped U.S. stocks settle higher, with the Dow Jones gaining more than 600 points as investors assessed key consumer inflation data.

The momentum pushed all three major U.S. equity benchmarks -- the S&P 500, Nasdaq 100, and Dow Jones -- to fresh record highs as investors piled into risk assets on growing bets that interest rates will soon fall.

Kroger Co. (NYSE:KR) reported better-than-expected second-quarter earnings. In contrast, The Lovesac Co. (NASDAQ:LOVE) fell around 15% after the company cut fiscal year 2026 GAAP EPS guidance and narrowed its sales outlook.

The Dow Jones index ended 617 points or 1.36% lower at 46,108.00, whereas the S&P 500 index rose 0.85% to 6,587.47. Nasdaq Composite advanced 0.72% to 22,043.07, and the small-cap gauge, Russell 2000, gained 1.83% to end at 2,421.53.

Insights From Analysts

Scott Wren, Senior Global Market Strategist at Wells Fargo Investment Institute, highlights a U.S. labor market that appears to be “moving at stall speed,” prompting a call to trim risk and rebalance investment portfolios.

According to his report, the U.S. labor market is showing clear signs of a slowdown. Wren notes that when negative revisions to previous months’ job gains are considered, the domestic labor market is “slowing noticeably”.

This slowdown is critical as Federal Reserve Chairman Jerome Powell has identified employment data as a key factor in determining future interest-rate decisions.

Despite the hiring slowdown, Wren points out that companies are not letting employees go. The commentary suggests looking beyond monthly job creation numbers to initial jobless claims, which serve as a good leading indicator for employment trends.

For most of this year, initial claims have remained stable in the 220,000 to 240,000 range. This is a historically low figure; in past decades, even during strong economic periods, claims often exceeded 300,000. This steady level of claims signifies that businesses are holding on to their staff. The bottom line, Wren states, is that “companies are not hiring but they are also not firing”.

Given this economic backdrop and a rally that has seen the S&P 500 Index climb more than 30% from its April lows, Wren’s strategy is to “trim risk and rebalance portfolios”. The commentary outlines several specific allocation shifts:

• Sector Rotations: Moving funds out of the Communication Services and Energy sectors (both now rated neutral) and into the Financials sector (rated most favorable).
• Asset Class Adjustments: Shifting capital from U.S. Small Cap Equities (rated unfavorable) and Commodities (rated neutral) toward U.S. Intermediate Term Taxable Fixed Income (rated favorable).
• Maintained Positions: The firm remains overweight and maintains a favorable rating on U.S. Large Cap and U.S. Mid Cap Equities.

Meanwhile, Ryan Detrick of Carson Research highlighted that the fourth year of the current bull market was almost here, and historically, this one usually does well.

According to data shared by him, the bull market returns 14.6% on average in its fourth year.

See Also: How to Trade Futures

Upcoming Economic Data

Here's what investors will be keeping an eye on Friday;

• September’s preliminary consumer sentiment data will be released at 10:00 a.m. ET.

Stocks In Focus

• Adobe Inc. (NASDAQ:ADBE) rose 3.83% after posting better-than-expected third-quarter results and raising its fiscal 2025 outlook after Thursday's closing bell.
• RH (NYSE:RH) dropped 7.93% after posting weaker-than-expected second-quarter results after Thursday's closing bell. Its quarterly earnings of $2.93 per share missed the analyst estimate of $3.20, and revenue came in at $899.15 million, which fell short of the Street estimate of $904.64 million.
• Ibex Ltd. (NASDAQ:IBEX) jumped 24.75% after reporting better-than-expected fourth-quarter financial results and issuing strong FY26 sales guidance.
• Frequency Electronics Inc. (NASDAQ:FEIM) plunged 11.03% after reporting downbeat financial results for its first quarter after the closing bell on Thursday.
• Warner Bros Discovery Inc. (NASDAQ:WBD) advanced 4.58% following the news that Paramount Skydance Corp. (NASDAQ:PSKY), up 2.41%, is preparing an all-cash offer to acquire the company.
• Super Micro Computer Inc. (NASDAQ:SMCI) gained 4.57% after the AI server manufacturer said it has begun volume shipments of systems powered by Nvidia Corp.'s (NASDAQ:NVDA) computing chips.
• Huize Holding Ltd. (NASDAQ:HUIZ) surged 70.67% ahead of its earnings as analysts expect it to report quarterly revenue of $38.94 million.

Commodities, Gold, And Global Equity Markets

Crude oil futures were trading lower in the early New York session by 0.10% to hover around $62.31 per barrel.

Gold Spot US Dollar rose 0.30% to hover around $3,644.80 per ounce. Its last record high stood at $3,674.75 per ounce. The U.S. Dollar Index spot was 0.15% higher at the 97.6800 level.

Asian markets closed higher on Friday, except China’s CSI 300 index. Australia's ASX 200, Japan's Nikkei 225, Hong Kong's Hang Seng, India’s S&P BSE Sensex, and South Korea's Kospi indices rose. European markets were mixed in early trade.

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