Stock futures pointed modestly higher Thursday morning. Investors were weighing three forces at once: escalating military exchanges between Washington and Tehran, a rebound in crude prices and a Treasury market that finally caught a break after weeks of pressure.

The yield on the 10-year Treasury note traded around 4.74%, down roughly four basis points, after Fed Governor Christopher Waller signaled Thursday that he is leaning toward leaving rates alone this month. Equities snapped a three-day losing streak on Wednesday, and the major averages entered Thursday’s session with a modest cushion.

But the trading day is a placeholder. The number that matters lands Friday morning.

What Wall Street Expects From the August Jobs Report

The Bureau of Labor Statistics will publish the August employment situation report on Friday, September 4, at 8:30 a.m. ET. Consensus points to a gain of roughly 58,000 nonfarm payrolls, with survey ranges running from about 50,000 to 55,000 at the low end. The unemployment rate is expected to stay at 4.1%.

That would count as a rebound, because July was ugly. Nonfarm payroll employment fell by 23,000 in July, the BLS reported, with losses concentrated in local government education, down 50,000, and retail trade, down 19,000. Health care kept growing, adding 22,000, but at a slower pace than its 36,000 twelve-month average.

The revisions were worse than the headline. The BLS cut May from a reported 129,000 to 63,000 and June from 57,000 to 20,000. “With these revisions, employment in May and June combined is 103,000 lower than previously reported,” the agency said. Average monthly job growth over the prior twelve months now stands at just 34,000 — a fraction of the pace investors got used to.

Wages are the second variable. Average hourly earnings sat at $37.62 in July, up 3.2% over the year. With crude oil rebuilding a geopolitical premium, any acceleration on that line would land badly. Our earlier read on how badly the summer payroll prints missed expectations explains why the market has stopped trusting first estimates.

Thursday’s Data Already Point to a Cooling Labor Market

Three pre-Friday indicators are already on the tape, and none of them argues for an upside surprise.

  • ADP private payrolls rose by just 38,000 in August, released September 2, against a Dow Jones consensus of 47,000. It was the weakest month since January. Education and health services added 45,000 and construction 12,000, but manufacturing shed 17,000 and professional and business services lost 16,000.
  • Initial jobless claims came in at 206,000, just above the 205,000 forecast and up from a revised 204,000. Continuing claims rose to 1.779 million and the four-week moving average climbed to 207,250. Stable, not deteriorating.
  • Challenger job cuts totaled 52,881 in August, up 58% from July but down 38% from a year earlier — the lowest August figure since 2022.

The composite picture is a labor market that is neither collapsing nor hiring. That is precisely the configuration that makes Friday’s print a coin toss for policy.

Why the Fed’s September Decision Rides on This Number

The Federal Open Market Committee meets September 15-16, with the federal funds target range currently at 3.50% to 3.75%. Unusually for a soft labor market, the live debate is about a hike, not a cut — a shift that hardened after the new Fed chair’s Jackson Hole address, which we covered in our preview of the three scenarios traders were pricing for Warsh.

In the days after that speech, market-implied odds scattered badly. CME FedWatch put the probability of a quarter-point September increase as high as 66%, while Kalshi traders sat closer to 48%. Before Jackson Hole, the odds of no change had been near 70%.

Waller pushed back on Thursday. “If this continues in the data due over the next two weeks, I would be inclined to support holding the target for the federal funds rate at its current setting,” he said, pointing to a three-month rate on the Fed’s preferred inflation gauge that has fallen from 4.76% in February to 3.05% now. He conceded inflation remains “meaningfully above” the 2% target and left the door open to a hike if the August data reverse that progress.

Energy is the reason the hawks still have a case. Oil is holding near five-week highs, with Brent around $95 a barrel and West Texas Intermediate above $90, after both benchmarks surged more than 4% Tuesday on fresh U.S. and Iranian strikes. Iran targeted U.S. allies in Jordan, the United Arab Emirates and Kuwait overnight. “Oil has consequently rebuilt some geopolitical premium, creating another potential inflationary headache at a time when markets are already debating whether US rates need to move higher,” said Daniela Hathorn, senior market analyst at Capital.com.

Precious metals are pricing the same anxiety. Gold futures gained 1.81% to $4,494.70 an ounce and silver rose 1.42% to $66.39 — a move that, as we argued in our analysis of why this gold rally could turn into a trap, carries its own risks for late buyers.

Premarket Movers

Earnings did the heavy lifting Thursday. Snowflake (SNOW) soared nearly 24% after beating second-quarter estimates, and ChargePoint (CHPT) jumped 17.3%.

On the downside, Ultragenyx (RARE) cratered 47% after its Phase 3 Angelman syndrome study missed its endpoints. Victoria’s Secret (VSXY) fell 17% on weak guidance, NetApp (NTAP) dropped 9.4%, and Campbell’s (CPB) slid 6.4% to $22.26 after cutting its dividend and posting an 8% sales decline to $2.1 billion.

In deal news, Nvidia (NVDA) agreed to acquire AI model platform Hugging Face for about $12.93 billion, with closing expected in 2027. Our pre-open roundup on the chip-stock revival tracked the same rotation.

What to Watch for the Open

  • 8:30 a.m. ET Friday: August nonfarm payrolls, consensus roughly 58,000; unemployment rate, consensus 4.1%; average hourly earnings, prior 3.2% year over year.
  • Revisions: after a combined 103,000 downgrade to May and June, the revision line may move markets more than the headline.
  • The 10-year yield: a hot print pushing yields back above 4.80% would pressure rate-sensitive equities; a soft one validates Waller’s patience.
  • Crude: with Brent near $95 and Hormuz traffic thinning, a sustained move higher keeps the hike case alive regardless of the payroll number.
  • Positioning: Waller’s comments cut against the hawks, but Warsh sets the tone. Watch how FedWatch odds reprice in the minutes after 8:30.

Nothing in Thursday’s session resolves the question. Friday at 8:30 does.