(Reuters) – U.S. stock index futures slipped on Thursday as markets awaited data for insights on the economic outlook and the likelihood of further interest-rate cuts from the Federal Reserve, while watching for a potential escalation in Middle East hostilities.

Wall Street’s three main indexes closed flat in the previous session after a private survey signaled that the labor market was not in a sharp deterioration.

Caution prevailed nonetheless, as investors contemplated the scale of Israel and the United States’ response to Iran’s recent attack on Israel. The CBOE volatility index, Wall Street’s fear gauge, hovered at more than three-week highs at 19.96.

At the top of the day’s agenda is a report which is expected to show that the number of Americans filing for unemployment benefits stood at 220,000 for the week ending Sept. 28, up from 218,000 the week before that. The pivotal nonfarm payrolls figures are due on Friday.

Also on tap is the Institute for Supply Management’s survey on services sector activity, which makes up the majority of the U.S. economy. For the month of September, the index is expected to stay in expansion territory at 51.7.

At 05:36 a.m. ET, Dow E-minis were down 124 points, or 0.29%, S&P 500 E-minis were down 17.25 points, or 0.30% and Nasdaq 100 E-minis were down 84.5 points, or 0.42%.

U.S. stocks have rallied for much of the year, with the benchmark S&P 500 confirming a bull rally and logging gains in eight of the previous nine months on expectations of lower borrowing costs.

Tech stocks have led the charge on the prospect of their earnings getting a boost from artificial intelligence integration.

Investors will also assess comments from Fed policymakers Raphael Bostic and Neel Kashkari later in the day. Odds that the U.S. central bank will trim rates by 25 basis points at its November meeting stand at 63.9%, up from 50.7% a week ago, according to the CME Group’s FedWatch Tool.

Meanwhile, a workers’ strike on the East and Gulf coasts entered its third day. Morgan Stanley economists said a prolonged stoppage could raise consumer prices, with food prices likely to react first.

Among premarket movers, oil stocks such as Occidental Petroleum and Exxon Mobil were flat, although crude prices rose more than 1% as investors priced in possible supply disruptions in the Middle East. [O/R]

Levi Strauss tumbled 11.3% after the company said it was considering a sale of its underperforming Dockers brand and forecast fourth-quarter revenue below expectations.

Tesla dropped 1.7% a day after reporting a smaller-than-expected rise in third-quarter deliveries. The EV maker also discontinued its most affordable Model 3 compact sedan in the U.S.

(Reporting by Johann M Cherian in Bengaluru; Editing by Pooja Desai)

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