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Trade Worries May Overshadow Upbeat Jobs Data

The major U.S. index futures are pointing to a lower opening on Friday, with stocks likely to extend the move to the downside seen over the past few sessions.

The downward momentum on Wall Street comes even though the Labor Department released a report showing stronger than expected job growth in the month of August.

The data may have raised concerns about the outlook for interest rates, as the report also showed an unexpected acceleration in the rate of wage growth.

Lingering trade concerns may also weigh on the markets following the expiration of a public comment period on new U.S. tariffs on $200 billion worth of Chinese goods.

Traders are likely to keep a close on the President Donald Trump and his administration for news regarding the implementation of the proposed tariffs.

China's Commerce Ministry has warned it will be forced to roll out necessary retaliatory measures if the U.S. adopts any new tariffs.

Adding to the worries about, Trump reportedly told a columnist for the Wall Street Journal he is "still bothered by the terms of U.S. trade with Japan."

Stocks moved mostly lower over the course of the trading day on Thursday, extending the decline seen over the two previous sessions. The Nasdaq posted another significant loss, although the Dow once again managed to close in positive territory.

While the Dow inched up 20.88 points or 0.1 percent to 25,995.87, the Nasdaq slumped 72.45 points or 0.9 percent to 7,922.73 and the S&P 500 fell 10.55 points or 0.4 percent at 2,878.05.

Technology stocks extended the sharp drop seen on Wednesday, contributing to the notable decline by the tech-heavy Nasdaq.

Traders appear to be expressing concerns that recent strength in the tech sector, which helped lift the Nasdaq and S&P 500 to record highs, may have been overdone.

The weakness on Wall Street also came following the release of a slew of U.S. economic data, including a report from payroll processor ADP showing private sector employment rose by less than expected in the month of August.

ADP said private sector employment climbed by 163,000 jobs in August after jumping by a revised 217,000 jobs in July. Economists had expected an increase of about 190,000 jobs.

"Although we saw a small slowdown in job growth the market remains incredibly dynamic," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

On Friday, the Labor Department is scheduled to release its more closely watched monthly jobs report, which includes both public and private sector jobs.

The report is expected to show employment increased by about 191,000 jobs in August after rising by 157,000 jobs in July. The unemployment rate is expected to dip to 3.8 percent from 3.9 percent.

In other economic news, the Institute for Supply Management released a report showing a much bigger than expected acceleration in the pace of growth in U.S. service sector activity in August.

The ISM said its non-manufacturing index jumped to 58.5 in August from 55.7 in July, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 56.8.

"There was a strong rebound for the non-manufacturing sector in August after growth 'cooled off' in July," said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.

"Logistics, tariffs and employment resources continue to have an impact on many of the respective industries," he added. "Overall, the respondents remain positive about business conditions and the economy."

Traders also kept an eye out for developments regarding trade, as U.S. and Canadian officials continue to hold talks on reforming NAFTA.

Energy stocks moved sharply lower over the course of the session amid another steep drop by the price of crude oil. Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index plunged by 2.9 percent, the Philadelphia Oil Service Index plummeted by 2.5 percent and the NYSE Arca Oil Index slid by 1.6 percent.

Significant weakness was also visible among semiconductor stocks, as reflected by the 2.7 percent drop by the Philadelphia Semiconductor Index. The index pulled back further off the more than two-month closing high set on Tuesday.

Biotechnology stocks also saw considerable weakness on the day, dragging the NYSE Arca Biotechnology Index down by 2.1 percent. With the drop, the index continued to give back ground after reaching a record closing high a week ago.

Brokerage, networking, and computer hardware stocks also moved notably lower, while most of the other major sectors showed more modest moves.

Commodity, Currency Markets

Crude oil futures are slipping $0.13 to $67.64 a barrel after tumbling $0.95 to $67.77 a barrel on Thursday. Meanwhile, after rising $3 to $1,204.30 an ounce in the previous session, gold futures are falling $2.50 to $1,201.80 an ounce.

On the currency front, the U.S. dollar is trading at 110.96 yen compared to the 110.75 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1587 compared to yesterday's $1.1623.

Asia

Asian stocks moved mostly lower on Friday to extend recent losses as another round of U.S. tariffs on China loomed and investors looked ahead to the U.S. Labor Department's August jobs report for clues to central bank rate hikes.

Chinese shares closed modestly higher in cautious trading, as a deadline for public comment on fresh U.S. tariffs expired. The benchmark Shanghai Composite Index rose 10.71 points or 0.4 percent to 2,702.30. Hong Kong's Hang Seng Index closed marginally lower at 26,973.47.

Japanese shares closed lower for the sixth straight session and the yen strengthened against the dollar as investors awaited the U.S. tariff decision and the outcome of U.S.-Canada trade talks.

Sentiment was also dented after U.S. President Trump reportedly told a columnist for the Wall Street Journal that he was "still bothered by the terms of U.S. trade with Japan."

The benchmark Nikkei 225 Index tumbled 180.88 points or 0.8 percent to 22,307.06, a 2-1/2-week low. For the week, the Nikkei lost 2.4 percent to post its biggest weekly drop since mid-March. The broader Topix Index closed 0.5 percent lower at 1,684.31.

Exporters saw widespread declines, with Toyota Motor, Panasonic, Canon and Kyocera Corp losing 1-4 percent. Tech stocks such as Sumco Corp, Tokyo Electron and Advantest plunged 5-7 percent.

On the data front, a government report showed that average household spending in Japan rose 0.1 percent year-on-year year in July, coming in at 283,387 yen. That beat expectations for a decline of 0.9 percent following the 1.2 percent drop in June.

Australian markets ended lower as financial stocks extended losses for a seventh straight session and an overnight drop in oil prices pulled energy stocks lower.

The benchmark S&P/ASX 200 Index slid 16.60 points or 0.3 percent to 6,143.80, while the broader All Ordinaries Index ended down 15.50 points or 0.3 percent at 6,252.30.

Banks ANZ, NAB and Westpac slid between 0.1 percent and half a percent on concerns that rising interest rates could stifle housing demand. Alumina dropped 1.1 percent after workers at Alco's alumina and bauxite operations in Western Australia rejected a proposed labor agreement.

Woodside Petroleum, Beach Energy and Oil Search tumbled 1-2 percent after oil prices fell more than 1 percent on Thursday. Meanwhile, Domino's Pizza soared 4.5 percent amid accusations that it is underpaying employees.

In economic news, the construction sector in Australia continued to expand in August, albeit at a slower pace, the latest survey from the Australian Industry Group revealed.

Europe

European stocks are mostly lower on Friday as investors digest a slew of regional data and trade worries persist ahead of a pending decision on U.S. tariffs on $200 billion worth of Chinese goods.

While the U.K.'s FTSE 100 Index has slumped by 1 percent, the German DAX Index and the French CAC 40 Index are down by 0.2 percent and 0.1 percent, respectively.

International Airlines Group has tumbled in London after its subsidiary British Airways suffered a data breach.

On the other hand, Ashmore Group has climbed as it reported a 26 percent increase in assets under management for the year.

Pub retailer and brewer Greene King has also soared after reporting a jump in beer sales in the first quarter.

In economic news, Eurozone GDP grew 0.4 percent sequentially as initially estimated in the second quarter, Eurostat figures showed. On an annual basis, GDP growth eased to 2.1 percent from 2.4 percent in the preceding period.

German industrial production fell 1.1 percent month-on-month in July, in contrast to the 0.2 percent rise economists had forecast, official data showed.

The country's exports declined for the first time in three months in July, while imports grew at a faster pace.

French industrial output grew 0.7 percent month-on-month in July, the same pace of expansion as seen in June, while the county's visible trade gap shrunk to 3.49 euros billion in July from 6.00 billion euros in the same month last year.

U.K. house prices rose at their fastest annual rate since November of 2017 in the three months to August, according to the latest Halifax survey.

U.S. Economic Reports

After reporting weaker than expected job growth in the previous month, the Labor Department released a report showing employment in the U.S. jumped by more than expected in the month of August.

The Labor Department said non-farm payroll employment surged up by 201,000 jobs in August after climbing by a downwardly revised 147,000 jobs in July.

Economists had expected employment to increase by about 191,000 jobs compared to the addition of 157,000 jobs originally reported for the previous month.

Despite the stronger than expected job growth during the month, the unemployment rate held at 3.9 percent in August compared to expectations for a drop to 3.8 percent.

The report also said the annual rate of average hourly employee earnings growth accelerated to 2.9 percent in August from 2.7 percent in July. Wage growth had been expected to remain unchanged.

At 9 am ET, Cleveland Federal Reserve President Loretta Mester is scheduled to lead a panel discussion on "Reality Check from the Markets" at a Boston Fed conference in Boston, Massachusetts.

Dallas Fed President Robert Kaplan is due to speak at the "Energy and the Economy: Charting the Course Ahead" Conference in Dallas, Texas, at 1:20 pm ET.

Stocks In Focus

Shares of Five Below (FIVE) are moving significantly higher in pre-market trading after the discount retailer reported fiscal second quarter results that exceeded analyst estimates on both the top and bottom lines.

Cloud identity management company Okta (OKTA) is also likely to see initial strength after reporting a narrower than expected fiscal second quarter loss on better than expected revenues.

Shares of Broadcom (AVGO) may also move to the upside after the chipmaker reported fiscal third quarter earnings that beat expectations.

On the other hand, shares of GameStop (GME) may come under pressure after the video game retailer reported weaker than expected fiscal second quarter earnings.

Generic drug maker Teva Pharmaceutical (TEVA) is seeing pre-market weakness after Credit Suisse downgraded its rating on the company's stock to Neutral from Outperform.

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