Dow futures rise as August jobs report comes in as expected

Stock futures rose on Friday, cutting losses for the week, as August’s jobs report came in about as expected, cooling fears that a much hotter labor market would give the Federal Reserve leeway to get more aggressive with interest rate hikes.

Dow Jones Industrial Average futures jumped 204 points, or 0.6%. The S&P 500 and Nasdaq 100 futures added 0.7% each.

Investors were comforted by the highly anticipated jobs report, which showed the economy added 315,000 jobs for the month, just under the Dow Jones estimate for 318,000. Steve Sosnick, chief strategist at Interactive Brokers, called it a “Goldilocks” report.

“This term applies here. Not too hot. Not too cold. It’s right around expectations. There’s nothing in here that takes 75 [basis points] off the table,” he said. “A number that is within expectations doesn’t change anything. What we’re seeing now is a relief rally.”

The unemployment rate rose to 3.7%, two-tenths of a percentage point higher than expectations. The August report is particularly important because it’s one of the last major economic reports the Fed will weigh before it raises rates at its September meeting, and it could help the central bank determine whether a 75-basis-point hike, or more, is more appropriate than a 50-basis-point hike.

The Dow and the S&P 500 ended the day higher in the prior session to kick of September, snapping four days of losses. Still, the major averages are set to end the week lower and notch their third negative week in a row, after slumping in the last days of August. The Dow is set to post a 1.9% decline, while the S&P and Nasdaq Composite are on track to fall by more than 2% each for the week.

Stocks have been weighed down by hawkish comments from Federal Reserve officials signaling that interest rate hikes aren’t going away anytime soon. Now, traders are watching to see if stocks will retest the June lows, especially since September is historically a poor month for the market.

Shares of retailer Lululemon jumped nearly 10% in premarket trading after reporting quarterly results that beat Wall Street’s expectations.

—CNBC’s Patti Domm contributed reporting.