Wall Street Set to Open Higher as Weak Jobs Data Cools Rate-Hike Bets

Wall Street's main indexes are poised to open higher on Friday after a surprise drop in US payrolls for July dampened expectations of an aggressive interest-rate hike by the Federal Reserve in September.

Data from the Labor Department showed nonfarm payrolls fell by 23,000 last month, against economist forecasts of an 80,000 increase. The unemployment rate eased to 4.1% from 4.2% in June, while annual average earnings growth slowed to 3.2%, below the 3.5% that was expected.

"Even with a negative job print, the job market remains healthy. But it gives the Fed some room to pause in September," said Anthony Saglimbene, chief market strategist at Ameriprise Financial. "It has seemed like the Fed is pressing more on the inflation front, but today's numbers may reframe that conversation and put the labor side of the mandate in focus."

Traders have pared back bets on a September rate increase, with odds now at about 20%, down sharply from 55% before the report, according to LSEG data. The central bank, under new Chair Kevin Warsh, has offered little forward guidance, making economic data and policymaker commentary the primary drivers of market moves.

At 8:46 a.m. ET, Dow E-minis were up 168 points, or 0.31%, S&P 500 E-minis added 41 points, or 0.53%, and Nasdaq 100 E-minis gained 342.75 points, or 1.16%.

In corporate news, collaboration software maker Atlassian jumped 32.5% in premarket trading after reporting a quarterly profit and revenue beat. Chipmaker Microchip Technology advanced 10.3% after forecasting quarterly revenue above estimates. The positive results lifted the broader sector, with Marvell and Micron up 3.9% and 3.2%, respectively. Software stocks also gained, with Palo Alto up 2.3% and ServiceNow adding 3.5%. Cybersecurity firm Cloudflare rose 15.5% after raising its full-year revenue forecast.

The main indexes are on track for their best weekly performance since April for the S&P 500 and the Dow, and since May for the Nasdaq, if gains hold. Strong earnings from AI-related companies have pushed the Dow and S&P 500 to record highs and helped the Nasdaq recover from a pullback that had briefly brought it nearly 10% below its peak.

In trade policy, the White House imposed price floors and a 15% tariff on products made from polysilicon, the key raw material for semiconductors and solar panels, which is primarily produced by China. Solar stocks gained on the news, with First Solar up 5% and SolarEdge climbing 2.1%.

Airbnb gained 7% after beating second-quarter revenue estimates, while ad-tech firm Trade Desk dropped 29.2% after forecasting third-quarter revenue below expectations.

Geopolitical tensions also simmered after Yemen's Iran-aligned Houthis attacked Saudi Arabia, and a report said Iran was reviewing a bill that would bar US, Israeli, and other "hostile" vessels from transiting the Strait of Hormuz, with fines of up to 20% of a ship's cargo value for violations.