Futures tied to the Dow Jones Industrial Average fell 274 points or 0.8%. S&P 500 futures were down 0.82% and Nasdaq 100 futures were also down 0.78%.
Stock futures turned negative on Thursday evening after reports that smoke was visible from the Ukrainian nuclear power plant – Europe’s largest – following an attack by Russian troops. Reports on Friday morning indicated that Russian troops had taken over a factory in Zaporizhzhia.
Energy prices rose across the board, with US West Texas Intermediate crude up 2.4% to $110.26 and global standard Brent crude up 2.2% to $112.88. Government bond yields fell as investors reduced risk, with benchmark 10-year Treasuries slipping 6.2 basis points to 1.78%.
This is the last employment report before the next Federal Reserve meeting, where the central bank is expected to start raising interest rates. Fed Chairman Jerome Powell said this week he is leaning towards supporting a one-time 25 basis point hike in March. The basis point is 0.01%.
“I think since we’ve seen Powell uncharacteristically frankly say he plans to support a 25 basis point uptrend, speculative thinking might be a bit more pegged to a 25 bps uptrend, even if we do see a stronger report tomorrow than expected,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments.
The payroll component of the report could be a key data point as traders try to determine the policy trajectory for that trajectory, Goodwin said.
“Even a 5.8% wage increase is a wage cut if inflation rises above 7%,” Goodwin said.
The war in Ukraine will also be the focus of investors on Friday. Ukraine still holds its capital, Kyiv, and fighting has been going on for more than a week, although reports of shelling in other major cities have increased. According to the UN, a million Ukrainians left the country.
Meanwhile, economic sanctions by the United States and its allies have effectively cut off the Russian economy from much of the global financial system. JPMorgan said Thursday in a note that Russia’s economy could contract by 35% year on year in the second quarter.
Energy prices rose sharply after the invasion, although they eased slightly during trading on Thursday. Futures for US benchmark West Texas Intermediate crude rose slightly on Thursday evening to around $109 a barrel.
Profit and loss statements have led to significant changes in expanded trading. Shares of retailer Gap and restaurant chain Sweetgreen rose after beating expectations. Shares of chipmaker Broadcom rose after beating earnings and revenue forecasts.
On Thursday, the three major indexes closed lower after an unstable session. The Dow was positive for most of the day before closing 96 points lower. The Nasdaq, triggered by software stocks, fell 1.56%.
The Dow Jones index fell 0.9% over the week, and this is the fourth negative week in a row. The S&P 500 is down about 0.5% for the week and the Nasdaq Composite is down more than 1%.