Indications: U.S. futures pare drop after payrolls data

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By Simon Kennedy, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock-market futures pared losses Friday, as the September jobs report proved dreary enough to support the notion of more quantitative easing by the Federal Reserve.

“The twisted irony is this should be perceived as a negative, but Wall Street is banking on heavy Fed involvement to help push stocks higher for the rest of the year,” Todd M. Schoenberger, managing director at LandColt Trading LLC, wrote in a note.

Stock futures struggled to remain positive after the government reported the U.S. economy lost 95,000 nonfarm jobs in September, while the unemployment rate held steady at 9.6%. Read more about jobs report.

After briefly dropping as much as 80 points, futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\z10 (DJZ10 10,947, +35.00, +0.32%)  lately fell 6 points to 10,906, and S&P 500 futures /quotes/comstock/21m!f:sp\z10 (SPZ10 1,160, +3.70, +0.32%)  were nearly flat at 1,156.

Futures on the Nasdaq 100 index /quotes/comstock/21m!f:nd\z10 (NDZ10 2,025, +11.00, +0.55%)  slipped 2.25 points to 2,011.25.

The move came after U.S. stocks finished mostly lower Thursday. The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 11,007, +58.46, +0.53%)  closed down about 0.2%, failing to breach the psychologically important 11,000 level.

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Total nonfarm payrolls were expected to fall by 8,000, while private-sector jobs were projected to rise by 85,000 on the month.

The unemployment rate was also expected to rise slightly, to 9.7% from 9.6% in August.

Speculation had been growing in the markets about whether the Fed will decide to implement another round of quantitative easing at its November meeting in order to boost the sluggish recovery.

St. Louis Federal Reserve Bank President James Bullard told CNBC Friday that the Fed will face a difficult decision on whether to begin another round of asset purchases.

“The economy has slowed, but it hasn’t slowed so much,” Bullard said. He added that he will go into the meeting “with an open mind.”

Among Friday’s stocks in focus, shares of Alcoa /quotes/comstock/13*!aa/quotes/nls/aa (AA 12.95, +0.75, +6.15%)  rose 3.6% in premarket trading after its late-Thursday announcement marked the unofficial start to earnings season.

Alcoa, a component of the Dow Jones Industrial Average, reported a roughly 21% drop in third-quarter profit, but still beat market expectations, and management also lifted its forecast for global aluminum demand in 2010. See full story on Alcoa’s results.

Also in focus, shares of chip maker Micron Technology Inc. /quotes/comstock/15*!mu/quotes/nls/mu (MU 7.58, +0.47, +6.54%)  could fall. Late Thursday, the company swung to a profit of $342 million, or 32 cents a share, for the fiscal fourth quarter, but that failed to match the consensus forecast of 39 cents a share.

In Europe, banking giant Barclays PLC /quotes/comstock/23s!a:barc (UK:BARC 297.25, -6.80, -2.24%)   /quotes/comstock/13*!bcs/quotes/nls/bcs (BCS 18.86, +0.14, +0.74%)  was one of the biggest decliners. The stock dropped 2.9% after a major investor said it had hedged its entire holding in the company in a deal that results in around 220 million shares being sold.

The U.K.’s FTSE 100 index /quotes/comstock/23i!i:ukx (UK:UKX 5,658, -4.52, -0.08%) fell 0.9% in intraday trading. In Asia, Japan’s Nikkei 225 average closed down 1%, while the Shanghai Composite Index soared 3.1% as trading resumed after a weeklong holiday.

Simon Kennedy is the City correspondent for MarketWatch in London.

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