U.S. equity futures are pointing to a mildly lower start on Thursday, suggesting stocks could face early pressure after a mixed performance in the previous session.
Sentiment has been dented by fresh comments from President Donald Trump, who has called for a substantial increase in U.S. defence spending, proposing a military budget of $1.5 trillion by 2027.
“This will allow us to build the ‘Dream Military’ that we have long been entitled to and, more importantly, that will keep us SAFE and SECURE, regardless of foe,” Trump said in a post on Truth Social.
While the proposal is viewed as supportive for defence-related equities, it has also reignited debate over the sustainability of U.S. public finances.
“Watch the bond market closely as Trump’s proposal to radically increase defense spending could put even more pressure on the already sky-high U.S. national debt,” said Russ Mould, investment director at AJ Bell.
“While Trump insists any extra spending would be paid for by tariffs, bond markets might not be as convinced,” he added. “Equity markets are already looking a bit doubtful, with futures prices implying a red day for Wall Street.”
Trading activity could remain subdued as investors await Friday’s closely watched U.S. jobs report, which is expected to provide further insight into the health of the labour market and the outlook for Federal Reserve policy.
Economists are forecasting an increase of around 60,000 nonfarm jobs in December, following a gain of 64,000 in November. The unemployment rate is expected to edge down to 4.5% from 4.6%.
Ahead of the payrolls release, data published earlier showed initial claims for unemployment benefits rose slightly less than expected in the week to January 3. The Labor Department reported that first-time claims increased to 208,000, compared with a revised 200,000 the previous week, while forecasts had pointed to 210,000.
Wall Street finished Wednesday’s session mixed after a choppy day of trading. The Dow Jones Industrial Average and the S&P 500 retreated after an initially positive start to the first full trading week of the year, while the tech-heavy Nasdaq managed a modest gain.
The Nasdaq ended up 37.10 points, or 0.2%, at 23,584.27. By contrast, the S&P 500 slipped 23.89 points, or 0.3%, to 6,920.93, and the Dow fell 466 points, or 0.9%, to 48,996.08.
The uneven performance reflected a pause following recent strength that had pushed both the Dow and the S&P 500 to record closing highs earlier in the week.
Investors also digested a series of economic updates, including an ADP report showing private-sector job growth in December was weaker than expected. ADP said employment rose by 41,000 jobs, following a revised decline of 29,000 in November, compared with forecasts for a 47,000 increase.
Additional data showed U.S. job openings fell more than anticipated in November, while a separate report from the Institute for Supply Management surprised markets with a stronger-than-expected reading on services activity. The ISM services PMI rose to 54.4 in December from 52.6 in November, defying expectations for a slight decline and marking its highest level since October 2024.
Sector performance was uneven. Housing-related stocks came under notable pressure, dragging the Philadelphia Housing Sector Index down 2.6%. Utilities, which tend to be sensitive to interest rate expectations, also sold off sharply, with the Dow Jones Utility Average falling 2.3% to a six-month closing low.
Telecommunications, financials and oil services stocks also weakened, while pharmaceutical, biotechnology and software shares finished the session with solid gains.
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