Stock futures were moderately lower Friday ahead of a key report on the nation's employment.
Overseas, European markets fell modestly, while Asian markets were mixed ahead of the reading on jobs in the world's largest economy.
In the U.S., the Labor Department's report is expected to show job losses moderated in July as the worst recession since World War II eases. The slowdown in job cuts comes as companies are likely done with their largest cost-cutting initiatives that have helped offset declining sales and revenues.
Stocks had been rallying for most of the past five months as investors have been encouraged by signs the ongoing recession is winding down. Market gains have slowed in recent days leading up to the employment report as investors try to determine how far the economy has bounced back from its bottom.
The data is expected to say job losses slowed in July to a pace of around 320,000. Employers shed 467,000 jobs in June.
The unemployment rate is expected to rise to 9.6 percent from 9.5 percent in June. It is widely anticipated the unemployment rate, which tends to lag a recovery in the economy, will eventually eclipse 10 percent. Employers typically do not start adding jobs until they are fully confident an economic recovery will last.
The report is due out at 8:30 a.m. EDT.
Ahead of the report, Dow Jones industrial average futures fell 24, or 0.3 percent, to 9,205. Standard & Poor's 500 index futures declined 2.10, or 0.2 percent, to 992.80, while Nasdaq 100 index futures dropped 2.75, or 0.2 percent, to 1,598.50.
In corporate news, embattled insurer American International Group Inc. posted its first quarterly profit since 2007. The insurance giant, which is now majority owned by the government, reported a profit of $1.82 billion in the second quarter as some of its businesses stabilized.
The government has provided AIG with a loan package worth up to $182.5 billion and received an 80 percent stake in the firm after bailing it out at the peak of the credit crisis last fall.
Its shares jumped 71 cents, or 3.2 percent, to $23.24 in premarket trading.
Investors were tentative on Thursday ahead of the monthly unemployment report. The Dow fell 25 points and other major indexes posted modest declines. The market has put the latest leg of its rally on hold this week after the Dow surged more than 13 percent over the previous four weeks on a bevy better-than-expected earnings reports.
Meanwhile, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was flat at 3.76 percent compared with late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.18 percent from 0.16 percent late Thursday.
The dollar was mostly higher against other major currencies, while gold prices fell.
Overseas, Japan's Nikkei stock average rose 0.2 percent. In afternoon trading, Britain's FTSE 100 declined 1.2 percent, Germany's DAX index fell 0.6 percent, and France's CAC-40 dropped 0.8 percent.
