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Futures slip on Apple“s weak forecast; payrolls data looms

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Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 26, 2023. REUTERS/Brendan McDermid/File Photo

Futures tracking the S&P 500 and the Nasdaq slipped on Friday, pressured by a drop in Apple’s shares following a dour holiday-quarter forecast, while investors awaited a crucial employment report for more cues on the interest rate trajectory.

Apple (AAPL.O) tumbled 3.1% in premarket trading after its sales forecast for the current quarter fell short of Wall Street expectations, even as an uptick in iPhone sales and strong services revenue lifted fourth-quarter results above estimates.

Other megacap growth stocks were mixed, with the benchmark 10-year Treasury yield steady at 4.66% after dropping to a three-week low in the previous session.

“The only thing that could save Apple from falling into dark waters is … a further rally in U.S. bonds, and a further fall in yields,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Wall Street’s main indexes rallied on Thursday, with the S&P 500 (.SPX) logging its biggest one-day percentage gain since April on growing optimism that the Federal Reserve had reached the end of its monetary tightening campaign.

The recent inflow of strong corporate updates have also kept the three major indexes on track for their biggest weekly gain in about a year. Of the 376 firms in the S&P 500 that have reported so far, nearly 81% have beaten earnings estimates, as per LSEG data.

Investors are now focused on the Labor Department’s report, which is expected to show U.S. job growth likely slowed last month, partly due to the strike against the Detroit Big Three automakers. The data is due at 8:30 a.m ET (1230 GMT).

Economists polled by Reuters expect non-farm payrolls to have increased by 180,000 jobs in October, after surging 336,000 in September, with the unemployment rate seen steady at 3.8%.

The reading, which will come on the heels of a mixed set of data on the labor market this week, could bolster the view that the U.S. central bank need not raise interest rates further. But analysts have cautioned that a stronger-than-expected report may bring concerns about interest rates back to the fore.

“Any strength in job additions or wages growth data could bring bond trades back to earth and remind them that if the US jobs market – and the economy – remains this strong, the Fed could turn hawkish again,” said Ozkardeskaya.

At 6:48 a.m. ET, Dow e-minis were up 5 points, or 0.01%, S&P 500 e-minis were down 6.5 points, or 0.15%, and Nasdaq 100 e-minis were down 55.5 points, or 0.37%.were down 55.5 points, or 0.37%.

Among major movers, Fortinet (FTNT.O) dropped 23.9% premarket as the cybersecurity firm forecast fourth-quarter revenue below Wall Street estimates.

Coinbase (COIN.O) shares fell 4.4% after the cryptocurrency exchange’s trading volumes declined for the second quarter in a row.

Block (SQ.N) jumped 16.9% after the payments firm raised its annual adjusted profit forecast.