Wall Street waits for jobs report

NEW YORK (CNNMoney.com) -- U.S. stocks could be on hold Thursday as investors await the closely watched employment report due at the end of the week for clues about the future direction of interest rates.

At 8:23 a.m. ET, futures were narrowly higher, with a comparison to fair value pointing to a flat to slightly positive open for Wall Street.

Traders are anxious ahead of the September jobs report due out Friday. The government report is expected to show a gain of 100,000 jobs after a decline in August, according to economists surveyed by Briefing.com.

The number is likely to play a big factor as the Federal Reserve decides whether or not to keep cutting interest rates. A weak report could give policymakers room to keep lowering rates, while a much stronger report could rattle investors hoping for more cuts from the Fed.

In addition to the rate outlook, investors will be looking to the report for signs of economic weakness. A number that comes in well below expectations could reignite recession fears and overshadow any boost stocks get from the likelihood of more rate cuts.

"I can't see there being that much movement Thursday," said Mark Vitner, senior economist with Wachovia. He said it will take a number close to the consensus forecast on payroll growth Friday to give a lift to markets, while the risks to the market from either a too weak or two strong are likely to keep investors nervous ahead of the report.

"I think the employment sets the tone for the whole month," he said. "Folks are waiting on that."

But the Fed won't be the only central bank on investors' minds Thursday. The Bank of England and European Central Bank both left rates unchanged in decisions announced Thursday before the U.S. market open. Both central banks have faced pressure to cut rates to maintain growth there.

In global trade, Asian markets ended lower, led by declines in Hong Kong. Major European markets fell in early trading ahead of the rate decisions there.

U.S. investors will take in two economic readings Thursday. A weekly report on jobless claims is due at 8:30 a.m. ET and a reading on August factory orders is slated for 10 a.m.

In major corporate news, Sprint Nextel (Charts, Fortune 500) CEO Gary Forsee is feeling the pressure from activist investor Ralph Whitworth, according to report in the Wall Street Journal. Whitworth told the paper he has "lost confidence" in Forsee and Sprint's other directors, as he threatened to lead a proxy fight for seats on the board.

Numerous published reports said Wall Street firm Merrill Lynch (Charts, Fortune 500) has started a house cleaning of two of the top executives from its fixed income unit that Wall Street is expecting to report billions in losses when the firm releases results later this month. The firm also will no longer follow plans to invest in a hedge fund that had been started by a third executive from the unit who left the firm amicably in the spring.

The Financial Times reports Citigroup (Charts, Fortune 500) is in talks with KKR to provide financing to buy some of the leveraged loans on its balance sheet. In the wake of credit market turmoil, major Wall Street firms have been struggling to find investors to take a combined $300 billion in those loan commitments off its hands.

Oil prices fell in early trading Thursday, after dropping below the $80 a barrel mark in a sell-off Wednesday following the weekly inventory report.