Stock futures slipped off an earlier rally amid volatility and were dipping their toes in the red before the open this morning. Unemployment came in below a 30-year low, not a good sign for tightening labor markets, but the rest of the employment numbers were relatively benign.

At 8:55 a.m. EDT, the

S&P 500 futures

were down 8.6 points, just over 2 points below fair value and not much of a clear indication for the early going. The

Nasdaq 100

futures were down 24.5 points, indicating some negative sentiment for large-cap technology stocks in the early going.

The April employment report showed nonfarm payrolls increasing by 340,000 in April, just under the 358,000 that economists polled by Reuters were looking for and far below the March figure of 416,000.

Meanwhile, the unemployment rate came in well below expectations at 3.9% while average hourly earnings were in line with forecasts at 0.4%. Economists were expecting unemployment growth of 4.0%, from 4.1% last month, according to Reuters' consensus poll.

The work week, meanwhile, averaged 34.6 hours. It was expected to remain unchanged compared with March at 34.5 hours.

The market has been waiting for these numbers all week. But they would have had to be pretty surprising to change current perceptions that the

Fed

is worried about the high-speed clip of economic growth and inflation. Last week's

Employment Cost Index

and

GDP

implicit price deflator brought on a furious selloff, while Wednesday's

beige book

and Thursday's

productivity

and

unit labor costs

numbers showed that as demand for labor tightens, labor costs are picking up and gaining ground on productivity.

Most observers have been saying that the market has already priced in expectations of a 50-basis point rate hike. According to the Fed funds contract, generally considered a reliable measure of where the market thinks interest rates will go, 66% of Wall Street now forecasts a 50-basis point rate hike due to signs of wage inflation in the employment cost index. Just a few weeks ago, according to this same index, the majority of the market expected a 25-basis point hike.

Meanwhile the earnings season is slowing to a close and

Masco

(MAS) - Get Report

will report today among few others.

The bond market had lost its earlier bounce, with the 10-year note down 11/32 to 100 4/32 and yielding 6.479%.

European markets were slipping off earlier strength after the release of the U.S. payrolls data. French and German indices in the green before numbers came out, got a splash of red Paris'

CAC

was down 29.06 to 6462.68, while Frankfurt's

Xetra Dax

was off 6.01 to 7380.70. London's

FTSE

was still in the green but up only 7.3 to 6206.9.

Meanwhile, the euro was trading up at $0.8976.

Most

Asian markets edged upward overnight, following volatility in U.S. markets yesterday.

Tokyo remains on holiday until Monday, and the dollar was lately higher at 108.30 yen.

In Hong Kong, the

Hang Seng

index fell 45.43 points, or 0.52%, to 15,268.64.

Indices in Indonesia, Malaysia, Thailand, Taiwan and New Zealand were also weakly higher.

For a look at stocks in the preopen news, see Stocks to Watch, published separately.