Jan 10 (Reuters) - Wall Street's main indexes were set to open lower on Friday after a better-than-expected jobs report fanned expectations that the Federal Reserve will take a measured approach to monetary policy easing this year.
At 8:46 a.m. ET, Dow E-minis were down 292 points, or 0.68%, S&P 500 E-minis were off 48 points, or 0.81% and Nasdaq 100 E-minis were lower 204.25 points, or 0.96%.
A Labor Department report showed the economy added 256,000 jobs in December, higher than estimates of 160,000 according to analysts polled by Reuters. Unemployment stood at 4.1%, compared with expectations of 4.2%.
Traders now see the central bank lowering borrowing costs for the first time in June and then staying steady for the rest of the year, according to the CME Group's FedWatch Tool.
Pressuring stocks, the yield on the 30-year Treasury note rose over 5% - its highest since November 2023, while Wall Street's fear gauge (.VIX), hovered near a one-week high.
Megacaps such as Tesla (TSLA.O), edged 0.9% lower, Meta (META.O), dropped 1%, while rate-sensitive banks including Morgan Stanley (MS.N), fell 1.4% and Bank of America (BAC.N), lost 1.2% in premarket trading.
"It's a good news report. It's very positive for the economy, but the markets are worried that a strong economy is going to be inflationary," said Thomas Martin, senior portfolio manager at Globalt Investments.
Wall Street's main indexes are poised to close their second consecutive week in the red, with the benchmark S&P 500 (.SPX), down nearly 3% from its record high hit a month ago.
Fresh inflation worries have taken the spotlight, compelling the Fed to issue a cautious forecast on monetary easing last month, as it anticipates policy changes on trade and immigration under President-elect Donald Trump, who is expected to take office in 10 days time.
U.S. stocks ended little changed on Wednesday with investors digesting conflicting sets of jobs data and a report that President-elect Donald Trump was mulling an economic emergency declaration on inflation.
Multiple reports on his plans, including one on imposing a national economic emergency to fast track tariff implementation, have left investors on edge about their potential impact on the economy and global trade.
The Russell 2000 index (.RUT), tracking domestically focused small-cap companies, has lost over 8% from its record high hit in late November. Futures tracking the index slid 1.7% to touch their lowest since October 2024 on Friday.
Voting members on the Federal Open Market Committee have voiced the need for a measured approach to lowering borrowing costs this year, the latest being St. Louis Fed President Alberto Musalem according to a report.
Later in the day, investors will also assess the University of Michigan's preliminary report on consumer sentiment for January.
Chip stocks such as Nvidia (NVDA.O), dropped 2.6% after a report said the U.S. could announce new export regulations as early as Friday.
Delta Air Lines (DAL.N), rose 7.6% after forecasting a higher-than-expected annual adjusted profit.
Insurance companies such as Mercury General (MCY.N), slumped 30.1% and Travelers (TRV.N), fell 3.4% on expectations of high industry losses from wildfires in Los Angeles.
Earnings reports will pick up next week and investors wait to hear the possible impact the incoming government's policy proposals could have on companies, along with insights into the resilience of the consumer and the U.S. economy.
Reporting by Johann M Cherian and Sukriti Gupta in Bengaluru; Editing by Maju Samuel
