U.S. equity futures traded higher early Thursday as investors absorbed the implications of a stronger-than-expected January jobs report and shifted focus toward fresh earnings releases and upcoming inflation figures.
As of 03:01 ET, Dow futures were up 0.3%, S&P 500 futures gained 0.3%, and Nasdaq 100 futures also advanced 0.3%.
Jobs report reshapes rate expectations
Wall Street ended Wednesday mixed. The Dow Jones Industrial Average slipped 0.1% but held above the 50,000 mark reached earlier in the week. The S&P 500 closed flat, while the Nasdaq Composite declined 0.2%. Treasury yields rose as traders reassessed the outlook for Federal Reserve rate cuts.
January nonfarm payrolls showed the U.S. economy added 130,000 jobs, comfortably above expectations, while the unemployment rate edged down to 4.3%. However, hiring was heavily concentrated in healthcare, a sector that has consistently supported overall employment growth due to demographic trends.
Other areas of the labor market appeared weaker. Professional and business services showed signs of cooling, raising questions about whether companies are trimming hiring plans amid broader cost pressures and the growing adoption of artificial intelligence. Federal government employment also declined as part of ongoing efforts to reduce public-sector payrolls.
Analysts at ING pointed to “sizeable” downward revisions to prior months’ data, noting that outside a handful of sectors, “the economy has actually been consistently losing jobs.”
“This suggests the risks remain tilted toward the Fed cutting rates more than the two reductions currently in our forecast,” they added.
Despite those concerns, the headline strength of the report has pushed market expectations for the next rate cut further out. Investors are now pricing in the first move around July, rather than June. The Fed had cut rates multiple times in 2025 in response to softer economic conditions.
Cisco drops after margin miss
In corporate news, Cisco Systems (NASDAQ:CSCO) fell more than 7% in extended trading after reporting quarterly gross margins that fell short of analyst forecasts.
Rising demand for AI-related data centers has tightened the supply of memory chips globally, driving up component costs. Cisco’s networking equipment relies heavily on such chips, putting pressure on profitability.
The company posted an adjusted gross margin of 67.5% for its second quarter, below expectations of 68.14%, according to LSEG data.
CEO Chuck Robbins told investors the company has already implemented price increases and renegotiated contracts. He added that demand remains strong, with AI-related orders expected to surpass $5 billion this fiscal year.
Earnings from Arista Networks and Applied Materials are scheduled later in the day.
Gold slips; oil edges higher
Gold prices retreated as robust jobs data dampened expectations for near-term Fed rate cuts. According to CME FedWatch, markets see a high probability that rates will remain unchanged in March and April. A firmer U.S. dollar also weighed on bullion.
Oil prices inched higher amid ongoing geopolitical tensions between the U.S. and Iran. Brent crude rose 0.2% to $69.56 a barrel, while West Texas Intermediate gained 0.3% to $64.81. Traders remain alert to potential supply disruptions in the Middle East, particularly after reports that the U.S. may deploy additional naval assets to the region.
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