U.S. stock index futures pointed to a sharply lower open on Friday as traders digested nonfarm payrolls that missed on the headline number but beat expectations on key unemployment and wage indicators.
"I think the report is stronger than the headline. As a result it probably gives the Fed what it needs to raise rates in September but it also gives it cover if it decides not to," said Kate Warne, investment strategist at Edward Jones. "It does provide of evidence that the economy continues to improve."
Dow futures traded about 200 points lower. Earlier, the futures fell more than 275 points after initially trading in a range in the minutes after the report showed that 173,000 jobs were created, missing expectations of 220,000.
The unemployment fell more than expected to 5.1 percent, while average hourly wages increased more than expected by 0.3 percent.
Strategists said a decline in unemployment and an increase in wages could support the Fed's case for a rise in rates.
The dollar pared losses to turn positive, with the euro briefly below $1.11. The 2-year yield turned higher after traders digested the report, rising to 0.72 percent from 0.68 percent earlier. The 10-year yield briefly traded near 2.16 percent, up from 2.12 percent earlier.