Stock futures dip ahead of May's jobs report

Stock futures were lower early Friday morning as investors focus their attention on key employment data due out later in the day.

Futures tied to the Dow Jones Industrial Average were down 79 points, or 0.2%. S&P 500 futures slipped 0.3%, while Nasdaq 100 futures fell 0.6%.

Traders are looking ahead to the May jobs report due out at 8:30 a.m. ET. Though the pace of job growth is expected to have slowed for the month of May, economists say the labor market remains strong, even as parts of the economy have weakened.

"Today's data also only heightens the focus on Friday's May payrolls release – particularly on wage growth," wrote Goldman's Chris Hussey. "A very strong reading might signal that the Fed has a lot more to do to quell inflationary pressures in the economy, while a big negative surprise – like we saw in ADP today – could support those who think the U.S. is fast slipping into a recession."

Economists see 328,000 jobs added in May, down 100,000 from April, according to a Dow Jones survey. Consensus estimates call for wages to rise by 0.4%, a faster pace than April's 0.3% increase.

In addition to the nonfarm payrolls, traders will be watching new purchasing managers' index data from Markit and ISM, due out later in the morning.

Stocks are coming off a strong session in which the major averages rose for the first time in three sessions, putting them on pace for a winning week. The Dow added 435.05 points, or 1.3%. The S&P 500 gained 1.8% and the Nasdaq Composite advanced 2.7%.

Thursday's gains pushed the major averages into the green for the week. The S&P 500 is up 0.5% and headed for a second positive week in a row.

Trading was choppy at the start of trading Thursday with investors divided on recession calls and if the Federal Reserve may be positioned to take a break from its interest rate hikes. Fed Vice Chair Lael Brainard on Thursday told CNBC it's unlikely to do so anytime soon and that it's "got a lot of work to do to get inflation down to our 2% target."

Investors were also digesting employment data released by ADP in the morning, which showed the slowest job creation pace of the pandemic-era recovery.

But stocks rallied into the close, finishing near session highs, as investors saw value in tech shares and other beaten-down names in this year's pullback.