By Ellis Mnyandu
NEW YORK (Reuters) - Stock index futures fell on Friday on investor unease ahead of government data expected to show that more than half a million jobs disappeared in December as recession tightened its grip on the economy.
Stocks to watch include Chevron Corp
Caution was also apparent overseas, with European benchmark indexes flat to slightly lower. The key U.S. nonfarm payrolls report is due at 8:30 a.m.
A loss of 550,000 jobs, as forecast in a Reuters poll of economists, would mark the worst single month of job losses in 34 years, while the unemployment rate is expected to rise to a 15-year high of 7.0 percent.
"We know the number is not going to be good," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. "The question is how bad it's going to be."
S&P 500 futures shed 2.90 points, and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 18 points while Nasdaq 100 futures fell 2.50 points.
If the forecasts prove correct, 2008 will be the biggest year of payroll losses since 1945. More bleak news on the employment front would present a major headwind for any recovery in the market, with the benchmark S&P 500 up 20 percent from its November 21 intraday bear-market low.
Investors worry mounting unemployment will make consumers more cautious, compounding the fallout from the prolonged housing downturn and dimming the profit outlook further.
When warning about its outlook, Chevron, a Dow component and the second-largest U.S. oil and gas company, cited the impact of lower energy prices on its exploration and production business.
Chevron shares were down nearly 1 percent at $73.51 before the bell.
U.S. stocks ended mixed on Thursday as news that Citigroup Inc
The gloomy economy has U.S. President-elect Barack Obama making a push for an economic stimulus plan set to include tax cuts and public works spending that could total nearly $800 billion.
(Editing by James Dalgleish)
