US STOCKS-Wall St futures dip; defense firms climb as Trump calls for higher budget

Updates prices throughout

By Purvi Agarwal and Nikhil Sharma

Jan 8 (Reuters) - U.S. stock index futures slipped on Thursday, as investors turned cautious in the run-up to Friday's crucial nonfarm payrolls report, while defense companies advanced after President Donald Trump called for a $1.5 trillion military budget.

Wall Street's main indexes diverged on Wednesday. The S&P 500 and the Dow ended lower after hitting intraday record highs as banks retreated from their peaks, while the Nasdaq .IXIC stayed afloat on investor optimism around AI-related stocks.

The Dow marked its steepest one-day decline since November 18 in the previous session, whereas the Nasdaq reached its highest level since late October.

In a milestone reached on Wednesday, Google-parent Alphabet GOOGL.O surpassed Apple AAPL.O in market capitalization for the first time since 2019, becoming the second-largest U.S. company.

Alphabet's shares were up 1% in premarket trading on Thursday after closing 2.4% higher in the previous session.

Meanwhile, defense stocks drew attention following Trump's statement that the 2027 U.S. military budget should be $1.5 trillion, significantly higher than the $901 billion approved by Congress for 2026.

RTX RTX.N gained 4.6%, Lockheed Martin LMT.N was up 6.8%, Northrop Grumman NOC.N inched 7.5% higher and Kratos Defense KTOS.O advanced 8.7%.

Investors looked past Trump's vow to block defense contractors from paying dividends or buying back shares until they speed up weapons production.

The move comes days after U.S. military forces captured Venezuelan President Nicolas Maduro. The White House said on Tuesday that Trump was also discussing options for acquiring Greenland.

"While details are unclear and implementation cumbersome, a move towards more government intervention would create uncertainty and add to some risk premium in the markets," said Mohit Kumar, an economist at Jefferies.

"We still remain constructive on the market but acknowledge the episodes of volatility which can follow Trump tweets. So far market has ignored geopolitical risks and focused on the fundamentals."

At 6:55 a.m. ET, Dow E-minis YMcv1 were down 170 points, or 0.35%, S&P 500 E-minis EScv1 were down 12 points, or 0.17%, and Nasdaq 100 E-minis NQcv1 were down 57.5 points, or 0.23%.

The focus this week will be on Friday's crucial nonfarm payrolls report for December, which would be among the first reliable datasets after the longest U.S. shutdown in history.

Separate reports this week have pointed to a weak picture, with job openings dropping to a 14-month low, while hiring remained sluggish.

A weekly reading of jobless claims data is expected on Thursday.

Among other stocks, Applied Digital APLD.O was up 5.7% before the bell after the data center operator reported second-quarter revenue above Wall Street estimates on Wednesday.

Constellation Brands STZ.N was up 2% after reporting third-quarter sales and profit above Wall Street estimates on Wednesday.

Revolution Medicines RVMD.O fell 9%, as AbbVie ABBV.N denied a media report that it was in talks to acquire the drug developer.

(Reporting by Purvi Agarwal in Bengaluru; Editing by Shinjini Ganguli and Maju Samuel)

((Purvi.Agarwal@thomsonreuters.com;))