U.S. stocks were on track to wrap up the week in negative territory as the "Trump trade" that has rallied equity markets since the Nov. 8 U.S. presidential election showed signs of losing steam.
Investors were also cautious of piling into risky assets, such as stocks, ahead of the Italian constitutional-reform referendum on Sunday, which analysts fear could trigger a new wave of financial jitters in the eurozone.
After closing at a record high on Thursday, futures for the Dow Jones Industrial Average fell 24 points, or 0.1%, to 19,173 on Friday.
Futures for the S&P 500 index dropped 4.85 points, or 0.2%, to 2,187.50, while those for the Nasdaq-100 gave up 18.75 points, or 0.4%, to 4,717.75.
The Dow industrials were the only of the three major equity benchmarks on track for a weekly gain, albeit a small one. The S&P 500 fell 0.4% on Thursday, leaving it down 1% for the week so far.
The tech-laden Nasdaq Composite eyed a potential loss of 3% for the week, after a 1.4% slump on Thursday. The significant international exposure among tech companies is seen as making them more vulnerable to the recent rise in the dollar in the wake of Trump's election win last month.
More broadly, however, U.S. stocks, Treasury yields and the dollar all got a major boost following the election on expectations the Trump administration will increase infrastructure spending that will result in higher inflation. But analysts say the postelection rally is nearing an end, with investment guru Jeffrey Gundlach saying the rally sparked by President-elect Donald Trump, dubbed the "Trump rally," is "losing steam." More about that in our Need to Know column today.
The receding Trump rally also weighed on Asian stocks on Friday. European stocks were trading sharply lower, too, with investors staying cautious ahead of Italy's referendum. While the vote is on proposed constitutional reforms, it is generally seen in Italy as a vote of confidence in Prime Minister Matteo Renzi.
If Italian voters reject the proposals--and polls point toward this outcome--analysts fear it would lead to Renzi's resignation and the dissolution of Italy's government.
Economic news: The top-tier nonfarm-payrolls data are due at 8:30 a.m. Eastern Time, and are expected to show that 200,000 jobs were added to the U.S. economy in November. The unemployment rate is forecast to remain at 4.9%, while average hourly are expected to have risen 0.1%.
The employment report usually garners lots of investor attention because it's seen as influencing the Federal Reserve's decision on interest rates.
However, analysts note that the November data won't carry the same weight as usual as a rate hike at the Fed's Dec. 14 meeting is already widely expected.
"Today's U.S. nonfarm payrolls will certainly be the most insignificant release of the year. The performance of the U.S. jobs market in November should have little, if no impact on the Federal Reserve's (Fed) plans to hike the interest rate in December," said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note.
"Unless a sizable disillusion that could imperil the Federal Reserve's (Fed) plans to hike interest rates in December, any knee-jerk move on the back of the U.S. data should wane rapidly," she added.