U.S. stock index futures moved lower on Friday as investors navigated renewed geopolitical risks in the Middle East and prepared for the release of key labor market data that could shape expectations for future Federal Reserve policy.
Market sentiment was also pressured by signs that the powerful rally in artificial intelligence-related stocks may be losing momentum following mixed reactions to recent corporate earnings.
Technology Shares Weigh on Futures
By early morning trading, futures on the S&P 500 and Nasdaq 100 were firmly in negative territory, while Dow Jones futures traded near flat.
The weakness followed Broadcom’s (NASDAQ:AVGO) latest earnings announcement, which failed to meet the market’s lofty expectations and sparked selling across the semiconductor sector. Shares of Micron (NASDAQ:MU), Intel (NASDAQ:INTC), and Advanced Micro Devices (NASDAQ:AMD) were among those affected.
Even so, Thursday’s broader market performance remained constructive, with gains in cyclical and value-oriented sectors helping offset pressure on technology stocks.
As analysts at Vital Knowledge noted, “[T]he Broadcom disappointment […] triggered selling in certain semiconductor stocks and parts of the data center infrastructure complex but rather than cause a broad market slump, money instead simply rotated elsewhere, including pockets of value/cyclical.”
Middle East Tensions Continue to Escalate
Geopolitical concerns intensified after Hezbollah formally rejected a ceasefire agreement between Israel and Lebanon, a development that may complicate ongoing diplomatic efforts involving Iran and the United States.
Tehran has repeatedly linked any broader peace discussions with Washington to a halt in hostilities in Lebanon, making the latest setback significant for regional negotiations.
Hezbollah leader Naim Kassem sharply criticized the agreement, calling it “absurd, humiliating, and insulting.”
Reports from the Associated Press indicated that the statement followed Israeli strikes that killed at least four people, while Lebanese forces entered parts of southern Lebanon that have experienced months of conflict.
Oil Markets Monitor Hormuz Developments
Energy traders remained focused on the Strait of Hormuz, where continued tensions between Washington and Tehran have disrupted tanker traffic and heightened concerns over global oil supplies.
Although Brent and WTI crude prices eased modestly, they remain elevated compared with levels seen before the conflict intensified.
Market participants continue to assess whether sustained supply disruptions could fuel inflationary pressures and alter the outlook for monetary policy worldwide.
Employment Data Could Influence Fed Expectations
Investors are now awaiting the latest U.S. nonfarm payrolls report, which is expected to provide a clearer picture of labor market conditions.
Consensus forecasts point to the creation of 85,000 jobs in May, with the unemployment rate holding steady at 4.3%.
The report arrives at an important time for the Federal Reserve, whose policymakers must balance inflation risks against economic growth and employment objectives. Under new Chair Kevin Warsh, the central bank faces heightened scrutiny as markets attempt to gauge the future direction of interest rates.
Report Highlights Possible Government Investment in AI Firms
Separately, NOTUS reported that senior U.S. officials have explored the possibility of the federal government acquiring equity stakes in major artificial intelligence companies.
According to the report, discussions focused on voluntary share transfers, with OpenAI chief executive Sam Altman reportedly participating in talks with senior Trump administration officials.
The report suggested that any returns generated from such investments could be directed toward public programs, including potential dividend distributions to American households.
While still at a preliminary stage, the discussions underscore the growing strategic importance of artificial intelligence to both policymakers and investors.
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