U.S. stock index futures slipped on Friday ahead of a crucial labor market report, at a time when concerns around inflation and the incoming Trump administration's policies have clouded the Federal Reserve's monetary policy outlook.

At 7:06 a.m. ET, Dow E-minis were down 66 points, or 0.15%, S&P 500 E-minis were lower 18.25 points, or 0.31% and Nasdaq 100 E-minis were off 78.75 points, or 0.37%.

Elevated Treasury yields also added to investor nervousness, with those on the 10-year benchmark near an eight-month high at 4.69%.

All eyes are on the Labor Department's non-farm payrolls report, due at 8:30 a.m. ET, after a set of jobs data earlier in the week painted conflicting views about the state of employment.

Friday's data is expected to show the economy added 160,000 jobs in December, with unemployment staying steady at 4.2% from the month before.

Later in the day, investors will also assess the University of Michigan's preliminary report on consumer sentiment for January.

Wall Street's main indexes are poised to close their second consecutive week in the red, with the benchmark S&P 500 down nearly 3% from its record high hit a month ago.

Fresh inflation worries have taken the spotlight, compelling the Fed to issue a cautious forecast on monetary easing last month, as it anticipates policy changes on trade and immigration under President-elect Donald Trump, who is expected to take office in 10 days time.

Multiple reports on his plans, including one on imposing a national economic emergency to fast track tariff implementation, have left investors on edge about their potential impact on the economy and global trade.

The Russell 2000 index, tracking domestically focused small-cap companies, has lost over 8% from its record high hit in late November. Futures tracking the index dipped 0.2% on Friday.

Voting members on the Federal Open Market Committee have voiced the need for a measured approach to lowering borrowing costs this year, the latest being St. Louis Fed President Alberto Musalem according to a report.

Traders see the central bank leaving interest rates steady for much of the first half of 2025, according to the CME Group's FedWatch Tool.

"With considerable uncertainty about the impact of potential tax and trade policy, inflation stuck firmly above target and the labor market remaining resilient, the argument for further rate cuts is getting harder to make," said Max McKechnie, global market strategist at J.P. Morgan Asset Management.

Among premarket movers, chip stocks such as Nvidia dropped 1.4% after a report said the U.S. could announce new export regulations as early as Friday.

Delta Air Lines rose 5.3% after forecasting a higher-than-expected annual adjusted profit and U.S.-listed shares of TSMC added 1% as the chipmaker beat fourth-quarter revenue estimates.

Insurance companies such as Mercury General slumped 40.7%, AIG dropped 3.1% and Travelers fell 4% on expectations of high industry losses from wildfires in Los Angeles.

Nike gained 1.1% after Piper Sandler upgraded the stock to "overweight" from "neutral".

Earnings reports will pick up next week and investors wait to hear the possible impact the incoming government's policy proposals could have on companies, along with insights into the resilience of the consumer and the U.S. economy.

(Reporting by Johann M Cherian in Bengaluru; Editing by Maju Samuel)